LCR was established in 1994 during the privatisation of British Rail. LCR bid for and won the contract from the UK government in 1996 to build and operate the Channel TunnelRail Link between London and the Channel Tunnel, under the terms of the Channel Tunnel Rail Link Act 1996. As part of this deal European Passenger Services and Union Railways, companies owned by British Rail, were transferred to LCR ownership, as well as key pieces of railway infrastructure including St Pancras railway station and the King's Cross Central lands nearby. EPS was the British arm of the joint Eurostar operation, along with SNCF in France and SNCB in Belgium. LCR renamed EPS as Eurostar Ltd. Union Railways had been developing plans for the CTRL since before the opening of the Channel Tunnel and became the construction company of the CTRL under the ownership of LCR. The original shareholders of LCR were Bechtel, Warburg, Virgin Group, National Express, SNCF, London Electricity, Arup, Halcrow and Systra. As part of the 1996 contract, LCR was to finance and construct the CTRL itself, funding the project from income received from the Eurostar operation. LCR also planned to raise additional capital from a partial stock market flotation once the project was underway.
Financial problems
In January 1998 LCR ran into major financial difficulties after finding that income from its share of the Eurostar operation was not at the level it expected. It blamed the lower level of passenger growth on disruption caused by a November 1996 fire in the Channel Tunnel and the growth of competing low-cost airlines. LCR's planned flotation, which had already been delayed, was aborted. With the entire CTRL project in doubt, LCR appealed to the British government for help.
Government support
To enable the project to continue, LCR was allowed to issue £3.7bn of private bonds, which the government pledged to guarantee. In return the government gained a percentage of future profits from the operation of the CTRL once completed, as well as a golden share in LCR. As part of the deal LCR was forced to appoint a management contract for EUKL. This was won by Inter-Capital and Regional Rail, a consortium of National Express, SNCF, SNCB and British Airways. The contract was to run from 1998 until 2010. Following the access to finance, LCR was able to begin the CTRL project. Rail Link Engineering was appointed to design and engineer the CTRL. RLE was a group made up of the four engineering companies involved in LCR; Bechtel, Arup, Halcrow and Systra. In addition, Railtrack was brought into the project by the government and agreed to purchase the CTRL from LCR once completed. To reduce the risks surrounding the project, the construction was split into two phases. Section 1, from the Channel Tunnel to Fawkham Junction in Kent, was to be managed by Union Railways under the control of Railtrack, who committed to purchase Section 1 from LCR once complete for the cost of its construction. The more complex part, Section 2 running from Fawkham Junction to London St Pancras was to be managed by Union Railways . Railtrack also purchased an option, to be exercised by 2003, to control Union Railways during construction and acquire Section 2 once complete. It was intended that with the completed full-length CTRL then in Railtrack's future ownership, EUKL would then pay track access charges to use the line.
Railtrack crisis
Following a series of rail accidents and a subsequent share price collapse, Railtrack announced in April 2001 that it would not take up its option to project manage and then purchase Section 2. Instead, Section 2 would be owned on completion by LCR, with Railtrack owning Section 1 as well as being responsible for operating both sections. In October 2001, Railtrack was placed into "railway administration" with debts of £7.1bn and in October 2002 Railtrack's assets were transferred to a newly created "not for dividend" company called Network Rail, whose debts would be guaranteed by the government. LCR re-purchased Railtrack's interest in Section 1 for £295m, meaning that both sections would once again be in LCR's ownership upon subsequent competition. Network Rail agreed to pay LCR £80m for the right to operate and maintain HS1 on LCR's behalf once complete.
CTRL completion
Section 1 of the Channel Tunnel Rail Link was completed in September 2003 and handed over by Union Railways to London and Continental Railways. Eurostar services started using Section 1, leading to international journey reductions of approximately 20 minutes. In March 2006 LCR shareholders rejected a takeover bid led by businessman Adrian Montague. Shortly afterwards the Office for National Statistics reclassified LCR as a public corporation due to LCR's reliance on government funding and the resulting high levels of influence the government enjoyed over the company. In August 2006 LCR put forward a proposal for High Speed 2, a domestic high speed line from London to Scotland costing £12-19bn. The Channel Tunnel Railway Link was finally finished when Section 2 was completed and handed over by Union Railways to LCR. In November 2007 the full length of the line was opened to the public, rebranded as High Speed 1 with Eurostar trains operating international train services from St Pancras railway station, and a further 20-minute journey time reduction.
Nationalisation
Following the Channel Tunnel Rail Link Act 2008, the Department for Transport took direct ownership of LCR in June 2009 for a nominal price. This was possible due to the company's dependence on £5.1bn of government-guaranteed debt, and the government's special share in LCR giving it a wide range of control over the business. The government stated it planned to sell off LCR's assets, such as EUKL and HS1, as individual companies to recoup some of the large amounts of government money paid to LCR since 1998.
Eurostar restructuring
On 31 December 2009, EUKL was renamed Eurostar International Limited. On 1 September 2010, the three national Eurostar operators merged into a single company with a single management structure. Following this change, the ICRR management contract for the UK business was terminated. All Eurostar assets were transferred to EIL, with LCR's holding in the new company becoming 40%. The remaining shares were held by SNCF and SNCB.
On 4 December 2013, the government announced that it intended to sell LCR's 40% stake in EIL. In June 2014, the shareholding was transferred from LCR to HM Treasury and the sale process was subsequently launched on 13 October 2014. The sale was completed in March 2015, raising a grand total of £760 million.
Current operations
LCR is a state-owned railway property development company. It is involved in a number of regeneration projects on former railway land, including King's Cross Central, Stratford City and Manchester Mayfield. It also manages the closed Waterloo International railway station and North Pole depot, as well as providing property advice to HS2 Limited.
