Supplementary memorandum by London Underground
(LU 07A)
PERFORMANCE OF
LONDON UNDERGROUND
Thank you for the letter of 20 January 2005,
requesting some further information about the ownership of Metronet
and Tube Lines. The answers to the two questions are as follows.
1. Details of ownership of Metronet and Tube
Lines
This is as set out on the attached sheet.
2. Transfer of Jarvis' stake in Tube Lines
to Amey
LUL could object to transfers of shares to persons
who are "undesirable" having regard to a number of factors
such as security and safety considerations. As Amey was already
a shareholder, this condition was relatively easily satisfied
(although we made some relevant enquiries).
LUL also could have had grounds for objection
based on the impact on Tube Lines' ability to perform its obligations
under its contract with LUL. LUL and its lawyers scrutinised the
arrangements and received written confirmation from Tube Lines
that they did not believe the transfer of the shares would have
an adverse operational effect.
However, LUL had no rights to object to the
transfer to Amey of Jarvis' interests under a secondment agreement
with Tube Lines. LUL understands that Tube Lines have put in place
robust arrangements for continuity of staff previously provided
by Jarvis and this should ensure that certain key skills remain
available to Tube Lines.
Additionally, LUL negotiated enhancement of
its contractual rights on subsequent disposals by Amey/Ferrovial
of both its shares in Tube Lines and interests in the secondment
agreement. There has clearly been a change in the structure of
Tube Lines by virtue of Amey's increased holding but I do not
believe that the structure is more fragile than it already was,
particularly with the enhanced contractual protection. However,
the PPP contract remains susceptible to the changes in fortunes
of its shareholders and the commitment of their businesses to
the underground.
I hope that this information is helpful to the
Committee.
Tim O'Toole
Managing Director
2 February 2005
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