Restructuring

 

TIDM39TQ 
 
RNS Number : 5034T 
CTRL Section 1 Finance PLC 
08 June 2009 
 

Restructuring of London and Continental Railways ("LCR") and implications for 
the Government Guaranteed Bonds issued by LCR Finance plc ("LCRF") (the "GGBs") 
and Asset Backed Notes issued by CTRL Section 1 Finance plc ("CTRLF") (the 
"Asset Backed Notes", together with the GGBs, the "Bonds") 
 
 
CTRL Section 1 Finance plc ("CTRL") 
GBP748m Class A1: 5.234% due 2035 (fixed) (ISIN: XS0179947196) 
GBP500m Class A2: 2.334% due 2051 (index-linked) (ISIN: XS0179947352) 
 
 
LCR Finance plc ("LCRF") 
GBP1,000m 4.75% due 2010 (fixed) (ISIN: XS0095091277) 
GBP1,225m 4.50% due 2028 (fixed) (ISIN: XS0094804126) 
GBP425m 4.50% due 2038 (fixed) (ISIN: XS0094835248) 
GBP1,100m 5.10% due 2051 (fixed) (ISIN: XS0150670551) 
 
 
Following the successful completion of the construction of the High Speed 1 rail 
link from St. Pancras Station to the Channel Tunnel ("HS1"), the Department for 
Transport ("DfT") and LCR are currently undertaking a joint programme of work in 
relation to a restructuring of LCR, the owner of HS1, the UK's interest in 
Eurostar and certain development land interests around the HS1 stations. 
As a result of these discussions, the Secretary of State for Transport 
("Secretary of State") has agreed to acquire CTRLF and LCRF and agreed to the 
novation to the Secretary of State of the relevant payment obligations of LCR 
and Eurostar (U.K.) Limited ("EUKL") in relation to the Bonds. The Bonds are 
already either guaranteed by the Secretary of State or secured 
over unconditional payment obligations owed by, or guaranteed by, the UK 
Government. As a result of a decision announced by the Office for National 
Statistics in February 2006, LCR is already classified as a public corporation 
for the purposes of the National Accounts and therefore the proposed 
transactions will have no impact on the Public Sector Net Debt. 
As announced on 13 May 2009, the state aid aspects of the transactions have been 
cleared by the European Commission, which has also cleared additional state aid 
aspects related to the restructuring of 
LCR (http://europa.eu/rapid/pressReleasesAction.do?reference 
=IP/09/761&type= 
TML&aged=0&language=EN&guiLanguage=en). 
As noted above, the existing guarantees and payment obligations of the Secretary 
of State will remain in place. Accordingly, the GGBs will remain unconditionally 
and irrevocably guaranteed by the Secretary of State. In the case of the Asset 
Backed Notes, the Secretary of State is already unconditionally and irrevocably 
committed either to pay directly or to guarantee the payment of receivables 
which underlie the Asset Backed Notes. The Secretary of State will now, 
additionally, directly pay all of these receivables. 
The Note Trustee has confirmed that the changes to the arrangements relating to 
the Asset Backed Notes are not materially prejudicial to holders of those Notes 
and on that basis the Security Trustee has agreed to certain contractual changes 
required to implement this, which are set out below. 
The rating agencies (S&P, Moody's and Fitch) are expected to confirm the 
existing AAA/Aaa/AAA ratings of the GGBs and the Asset Backed Notes. 
The Secretary of State is making a separate statement today in relation to the 
broader restructuring of LCR. 
 
 
  Modifications to Asset Backed Notes documentation 
The following modifications have been made to the documentation relating to the 
Asset Backed Notes (no changes have been made to the transaction documents 
relating to the GGBs); 
 
(a) EUKL's rights and obligations under the First Section 1 Track Access Charges 
Deed dated 4 November 2003 have been novated to the Secretary of State; 
 
(b) the Deed of Covenant dated 12 November 2003 between (1) LCR and certain of 
its subsidiaries, (2) CTRLF and (3) the Security Trustee has been terminated and 
a new deed of covenant on substantially the same terms has been entered into 
between the Secretary of State, CTRLF and the Security Trustee; 
 
(c) the LCR First Legal Mortgage dated 12 November 2003 over the shares in CTRLF 
has been released and the Secretary of State has executed a mortgage over those 
shares in favour of the Security Trustee; 
 
(d) EUKL's rights and obligations under the Indexation Agreement dated 12 
November 2003 have been novated to the Secretary of State; 
 
(e) LCR's rights and obligations under the Standby Administrative Receiver 
Agreement dated 12 November 2003 have been novated to the Secretary of State; 
 
(f) LCR and CTRL (UK) Limited's rights and obligations under the Master 
Definitions and Framework Deed dated 12 November 2003 have been novated to the 
Secretary of State and this deed has been amended to reflect the restructuring 
changes; 
 
(g) LCR's rights and obligations under the Administration and Cash Flow 
Management Agreement dated 12 November 2003 have been novated to the Secretary 
of State and this agreement has been amended to reflect the restructuring 
changes; 
 
(h) LCR's rights and obligations under the Nominee Deed dated 12 November 2003 
have been novated to the Secretary of State and this agreement has been amended 
to reflect the restructuring changes; 
 
(i) CTRL (UK) Limited's rights and obligations under the Subordinated Loan 
Agreement dated 12 November 2003 have been novated to the Secretary of State; 
and 
 
(j) the Receivables Purchase Agreement dated 12 November 2003 has been 
terminated. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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