Alistair Darling, the Chancellor, and Ruth Kelly, the Transport Secretary, are expected to rule early next year on what happens to London & Continental Railways, two years after the Government shelved a quick sale that became mired in accusations of cronyism.

London & Continental Railways disclosed yesterday that a decision on its future would be taken soon after the long-awaited £5.7 billion high-speed line opens for business on November 14. Rob Holden, chief executive of LCR, said: “After November 14, the restructuring will be our No 1 priority. Probably in the first quarter of 2008, the Secretary of State and the Chancellor will make some decisions.”

The likely plan is that the company will be broken up into three parts: the railway lines, which would make money by charging Eurostar trains and local services to Kent; a share of Eurostar, the train operator; and land around King’s Cross and Stratford.

All or some of the three parts may then be auctioned off, with proceeds being returned to the Treasury, which has underwritten the private sector debt involved in the project to the extent of £6.1 billion.

The final valuation of the business will be determined by a number of variables including market interest, the state of the property market and levels of passenger traffic through the Channel Tunnel.

The property company alone is thought to be worth at least £1 billion because of the regeneration that the new railway line has brought to King’s Cross and Stratford.

The sale is already sparking interest among overseas infrastructure funds and private equity groups, which have been monitoring the company’s progress since a sale was put off last year. The likes of Macquarie, the Australian bank, Goldman Sachs and the sovereign funds of the Middle East and the Far East, could be potential bidders.

According to LCR, Sir Adrian Montague, who attempted to buy the company in 2006, has not been back in touch. In February 2006, Sir Adrian, a Treasury adviser, tried to acquire the company with backing from Goldman Sachs. However, the sale was called off after Mr Darling, then Transport Secretary, announced a sale would not take place until the high-speed link was completed.

Mark Bayley, finance director, said: “With the Department and the Treasury, we are looking hard at whether those three companies should stay together and will shortly make a joint recommendation to ministers about restructuring.”
LCR has said that it is in no hurry to carry out restructuring and will pick a time when the financial markets are more stable.

However, £1 billion of the company’s debt needs to be paid back by 2010 and the plan is to refinance the company and then spread this debt over a longer period.

The Queen and the Duke of Edinburgh will officially open the new High Speed 1 line and St Pancras International station on Tuesday.