Railtrack bidder 'could walk away'

SWIFTRAIL, the consortium backed by German bank WestLB, has warned it could abandon its bid for Railtrack if Transport Secretary Stephen Byers sticks with his plan to auction the collapsed network operator.

It believes an auction could take up to three years. Instead it wants the Government to reconsider a 'collaborative' approach, which it thinks could deliver Railtrack from administration by the middle of the year. 'We will review our options, if the government insists on a long timetable,' said a SwiftRail insider.

SwiftRail, lead by corporate trouble shooter David James, has offered the Government several alternatives. They include buying Railtrack outright, and buying the network and offering the Government the option to buy it back once Byers' planned not-for-profit successor to Railtrack has been formed.

If SwiftRail takes complete control, its plans to split Railtrack into two companies - one not-for-profit company managing rail safety, and another for-profit company managing the rails and stations.

Its withdrawal would be a major blow for shareholders and would leave the Government as the only contender for the assets. Already SwiftRail has spent more than £1m developing its bid and so far it is the only consortium offering to buy Railtrack whole. US finance house Babcock & Brown has said it is interested in Railtrack, but details are sketchy and it is seen as an outsider.

'If SwiftRail thinks it will be long and difficult then it does not bode well for others,' said a spokesman for City shareholders, who have launched legal action against the Government, alleging improper use of its powers. The shareholders want the Government to produce the documents justifying its decision to withdraw Railtrack's funding in early October - the move that led to the firm's collapse.

Meanwhile, Railtrack denied reports that it is planning to axe 1,100 jobs.