Britain puts stake in Eurostar up for sale

By Reuters

Oct 13, 2014 12:02 AM EDT

The British government plans to sell its 40 percent stake in the fast-speed Eurostar train operator that links Britain with the European continent, finance minister George Osborne announced late on Sunday.

Osborne invited bidders to put in expressions of interest by Oct. 31, and if the bids are high enough the plan would be to finalize agreements in the first quarter of next year.

The sale, which sources said in March could raise 300 million pounds ($500 million), formed part of the government's plan to sell 20 billion pounds of corporate and financial assets between 2014 and 2020.

"I am determined that we go on making the decisions to reform the British economy and tackle our debts," Osborne, in the United States for international financial meetings, said in a statement. "The sale proceeds would make an important contribution to the task of reducing the public-sector debt."

Investment bank UBS AG (UBSN.VX) is advising the government on the sale, in which infrastructure funds, pension funds and insurance funds have expressed the most interest.

Eurostar's other shareholders are French state-owned rail operator SNCF [SNCF.UL] with 55 percent and the Belgian government with the remaining 5 percent.

The French and Belgian shareholders have decided not to bid, a person familiar with the process said. They have a last-look right which would enable them to offer a 15 percent premium on the final bid, but this was considered unlikely to be used.

It would mark the first time a share of Eurostar, which has carried 145 million passengers since coming into service in 1994, has been owned by the private sector.

Proceeds of the sale will technically go to paying down the debt, rather than reducing the deficit, but practically speaking it does make funds available which could be used for infrastructure or other spending.

In 2013 Eurostar paid an 18.6 million pound dividend, of which 7.4 million went to the British government; in 2012 it paid 16.3 million pounds, of which 6.5 million went to Britain.

The Conservative government last year privatized the Royal Mail (RMG.L), raising 2 billion pounds but drawing criticism that it priced it too low, as shares have risen sharply since then.

Other possible asset sales include the government's stake in the uranium enrichment company URENCO; public-sector spectrum; legacy Royal Mail pension assets; and the government's income-contingent student loan book.

The government has decided against selling off the Royal Mint, principally because it would not raise enough money.

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