Railtrack is considering a substantial rights issue to help finance the £6.6bn it will cost to expand the rail network by 2006 over and above the £15bn expenditure budget that the rail regulator announced on Monday. Railtrack is considering a substantial rights issue to help finance the £6.6bn it will cost to expand the rail network by 2006 over and above the £15bn expenditure budget that the rail regulator announced on Monday. One insider said that Railtrack had discussed a £1bn rights issue internally and that the timing was under debate. The rest of the £6.6bn would be met through bond issues and bank borrowings.Analysts said that after Monday's favourable regulator review, the company could consider raising up to £4bn through the issue of new shares.An industry source said: "The question is whether to go with a rights issue now, after the positive review, or wait until it has demonstrated to the City its management competence."The money announced by Tom Winsor, the rail regulator, only covered maintenance and enhancement of the existing network.Paul Plummer, chief economist at the Office of the Rail Regulator, said: "Our settlement enables Railtrack to go and raise other financing It can raise new equity if it wishes to do so. That is up to the company." The expansion of the network and exceptional projects, such as the upgrading of the East Coast Main Line and the Thameslink 2000 project, were not budgeted for in the review. Railtrack must turn to the private sector to finance these schemes, which are required because the network is under strain from the huge growth in rail usage.Railtrack and the train operating companies have identified expansion schemes that will cost £6.56bn more between 2001 and 2006 than the rail regulator provided for in his review. The sum does not include Railtrack's share of the £4.2bn bill for the first phase of the Channel Tunnel Rail Link.Wyn Ellis, an analyst at Commerzbank, said: "A rights issue is the quid pro quo for the favourable review - the Government now expects Railtrack shareholders to dip their hands in their pockets."On Monday, the rail regulator set out Railtrack's basic financing for the five year period from 2001. The £14.9bn budget was much more generous than was indicated in the regulator's draft review, published in July.
The regulator set Railtrack's permitted return on capital at an attractive 8 per cent.The positive settlement led to a 6 per cent jump in Railtrack shares on Monday and yesterday the stock rose a further 7 per cent to close at 1,190p, valuing the company at £6.1bn. The shares hit a high of 1,768p in 1998.Mr Ellis said the company would want to see the shares at 1,400p, before it issued new equity.He said: "If things are going well, there would not be a problem getting a rights issue away, given the 8 per cent return promised.". Reuters, the information provider, yesterday announced it was teaming up with the world's three biggest currency trading banks to create an on-line foreign exchange portal. Reuters, the information provider, yesterday announced it was teaming up with the world's three biggest currency trading banks to create an on-line foreign exchange portal. Atriax, a venture being launched jointly with Chase Manhattan, Citibank, and Deutsche Bank, is just the latest in a series of attempts to capture the lion's share of the £1,000bn-a-day forex market as it migrates online.Rivals include FXall, an online forex trading portal grouping HSBC, Royal Bank of Scotland and JP Morgan, which is scheduled to launch before the end of this year. Others are already up and running including CFOweb, which has nine partner banks offering prices, and Curranex, which quotes prices from 25 participating banks. Atriax goes online next Tuesday.Dan Morehead, chief executive officer of Atriax and formerly the chief financial officer of Tiger Management, the hedge fund, said Atriax's big advantage over its rivals was that it is backed by 50 major banks that together account for 50 per cent of global forex trade."It is amazing that although the foreign exchange market is the largest financial market in the world, it is still an over-the-counter market," Mr Morehead added.
Most foreign exchange business is conducted over the phone with traders competing blindly to offer the best quotes. Methods have not changed much since traders starting dealing in cable (sterling-dollar) at the turn of the last century."This puts everything in one place," Mr Morehead said. None of the members is obliged to put their business through Atriax although General Electric, a major dealer in the forex market which is joining an advisory board of customers, said it expected to put the majority of its forex business through the new portal.. Not since Guinness and Grand Met shocked the City by announcing their intention to merge two-and-a-half years ago has so much speculation and excitement surrounded the worldwide spirits industry. Not since Guinness and Grand Met shocked the City by announcing their intention to merge two-and-a-half years ago has so much speculation and excitement surrounded the worldwide spirits industry. The $23.5bn (£16.2bn) merger between France's Vivendi and Canada's Seagram, which was given final clearance by the Canadian authorities to go ahead last week, will create a media and entertainment giant.
But it will also usher the disposal of Seagram's coveted spirits portfolio of 250 drinks brands, including such prized assets as Captain Morgan rum and Crown Royal Canadian whisky. Not surprisingly, the lure of these expensive tipples, thought to be worth about $7bn in total, has sparked a rush to the bar reminiscent of the end of prohibition. As one analyst commented: "Opportunities like this don't come up... well, hardly ever."With the auction process now entering its second stage, the frontrunners have emerged as: the UK's Allied Domecq and Diageo, France's Pernod Ricard, the Bermuda-based Bacardi and Brown-Forman of the US. Diageo, the world's biggest spirits group which is the product of the Guinness and Grand Met marriage, is prevented for competitive reasons from acquiring the whole Seagram portfolio.