An email from a treasury special advisor to a DTLR special advisor, discussing the possible replacement of Railtrack ("Ariel") and the problem of satisfying their shareholders.
This document was published on 29th August 2001 by HM Treasury.
It was written by Shriti Vadera.
The original document format was PDF File, and comprised 3 pages.The original document can be found here.
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"2. I'm afraid I totally disagree with Andrew's view on giving control to the TOCs. We should rehearse the arguments before hand to get a common line as I do not think it would be a good idea for us to disagree publicly in front of the team today as they are already all over the place wilhout us adding to the confusion. I think we will go a long way to meet the fragmentation concerns -see Mercers section when it arrives - but giving the TOCs "control" is not in our best interests in terms of service, deliverability or vfm - not to mention it is inconsistent with the not for profit model as TOCs are thinly capitalised equity profiteers of the worst kind....
3. l think it would politically dreadlul to be paying off Ariel shareholders and I see absolutely no reason we should want to. There is no point in worrying about it now as it will be something that comes out of the administrator's negotiations and valuation not for us to make an offer. The important thing for us is - in a UNITED way - to give the clear view thal we do not think it is for the Government to bail them out and our position is (not to mention Ariel's own advisers') that there is no value left in the equity.. If we start with a weak signal your prophecy will be self fulfilling. I do not think this is one for us to wobble on - we have enough things to spend money on in the sector without worrying about bailing out shareholders who added no value to the company."
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