Down the Tube?

I think we should wait and see what happens first!

My money is on the work being sold on by Metronet to other companies or being bought out by one of the bigger consortium members and then run like the Tube Lies model.

Good to see that they are at last going to get some of the money they are owed by LUL.

Lets just hope that some venture capalist firm doesnt appear!

I think they under-bid when the PPP contracts were put out, either that or these refurbs [stations and 78's] are costing more than they had estimated...

I was told that just ONE tile for the replica Acanthus Leaf [green embossed tiles] at Chalk Farm cost £24. Thats for just ONE...

*cough* Oxo Circy *cough*

The beleaguered rail maintenance firm Metronet faces tough questions from London Assembly members.
The Assembly's Transport Committee will quiz the company about its finances and its future work on the Tube.

The meeting follows fears that the consortium faces administration after an independent review rejected its claim for £551m in overrun costs.

The company is responsible for maintaining the Bakerloo, Victoria and Central Lines.

Funding gap

Geoff Pope, transport spokesman for the London Assembly's Liberal Democrats, said: "It looks like there's going to be a funding gap."

"Some of this money is down to London Underground but most of it is to Metronet. Either way, there's more money to find and it should be back to Gordon Brown who set up this deal in the first place, against the wishes of the Mayor and Londoners.

"Londoners shouldn't have to pay for any of these cost overruns."

Committee members are also expected to ask about the recent derailment on the Central line and plans to close ticket halls.

Bombardier announced today its decision to write-off its investment in Metronet following the release of the Public-Private Partnership (PPP) Arbiter’s draft directions on interim infrastructure service charge (ISC) for Metronet Rail BCV Limited issued on Monday, July 16th, 2007. Given the uncertainties regarding Metronet’s funding position following the Arbiter’s draft directions, Bombardier will record a write-off of approximately $164 million US (£82 million) in the second quarter of fiscal year 2008.

Bombardier’s turnkey supply contracts with Metronet, currently valued at approximately £3.3 billion ($6.7 billion US), are for new trains, signalling, refurbishment of trains and fleet maintenance activities. These supply contracts are progressing well and Bombardier will continue to work on them as per the requirements contained in its contracts. Bombardier remains fully committed to deliver a world class, safe and reliable Tube for London.

tim o toole was talking on the news he was saying that all work should be able to carry on as usual, and that staff would be kept on, i dont know but it sounds like either it is going to be taken back in house or they already have another company lined up i wonder does anyone think tube lines would be interested

just reported on london tonight that london underground and the mayor have been working all day on emergency plans for when metronet go into adminerstration tomorrow.

they are looking at the main line running items first then will look at restarting the referb work so guess that means it will be put on hold

also they stated that london underground had a list of managers in metronet who they would not be keeping on

so what does everyone think this means what will happen to the d stock refurb program will it stop or what

Obviously bearing in mind my employer I can't say too much, but I would expect it to continue.
As do Bombardier, it would seem from their press release yesterday:

"Bombardier’s turnkey supply contracts with Metronet, currently valued at approximately £3.3 billion ($6.7 billion US), are for new trains, signalling, refurbishment of trains and fleet maintenance activities. These supply contracts are progressing well and Bombardier will continue to work on them as per the requirements contained in its contracts."

And their luvvying up to Ken and the Olympics!

EDF also have the PFI Contract to supply, maintain and upgrade power supplies to the LUL Network. The Power Control staff however remain with LUL.

I expect most of the ongoing work to continue as if nothing happened. Halting work may actually cost more and will make Metronet or its contracts less valuable for new investors or bidders on parts of the contracts and assets. However, they might just put some projects that were about to start on hold.

The Independent says:

THIS IS A GENERALISATION ONLY!

If a company is in Administration, not Liquidation, it is administered by licensed Insolvency Practitioners under the terms of the, say, crystallised floating charge [the creditors being the chargees, the company the chargors]. I seem to recall that when a company goes into admin. that all employees are automatically sacked but this of course would mean the end of the business, and would only apply if the Admins decided on a Liquidation: see below. I may be out-of-date though on this. The Administrators will seek to continue to trade unless by law they cannot, i.e. the company is unable to pay its debts in which case they are personally liable. The idea is that the company continues to protect the assets of the bank or other owner of the charge [or the shareholder companies], and then sell, dispose or otherwise deal to the best advantage of the chargees [or shareholders]. In this case, it is vital that things continue as much as possible to protect the value to the chargees, and allow stock taking to be made on inspection of accounts to see what health the company is in.

Of course employees have legal protection, and the Admins. will continue to ensure that they are paid. They may even open new bank accounts for that purpose. Usually banks call in Admins., and as they want to see the company trade out of Administration or be disposed of to the best possible deal, they may well provide funds for the company to trade. Shareholders amy also inject caopital to same purpose.

There is a big distinction between Administration and Liquidation: the latter means that all employees are sacked, the employees' final wages are paid, and the assets then disposed of on a winding-up. In an Administration the company continues to trade, and may even come out of Administration in the event of a shareholder's agreement after refinancing, dosposal of unwanted assets to release capital, or agreement with creditors. In the US they call it "Chapter X [10]" protection from creditors, and many airlines have gone into and out of Chapter X. Administration is not the end of the line so to speak.

I would speculate that Tubelines will not want to take over some of Metronet's lines. Personally I thought that Metronet were quite forward thinking in some of it's upgrade plans, and often thought outside of the box, or looked at how other metro systems run things. I hope this continues if things do go back to being in-house.

Another issue I see with things going back in-house is that targets may not be met. For example if Metronet planned a line capacity upgrade of 15%, and only ran 5% more, they would most likely have lost out financially. If the upgrades go in-house what financial incentive is there to run that 15% upgrade? I hope we don't end up with more 0% peak capacity increases such as what happened with the Central Line upgrade.

BREAKING NEWS !!!

news.bbc.co.uk/1/hi/business/6903977.stm