HAMILTON, Bermuda, December 15 /PRNewswire-FirstCall/ -- Sea Containers
Ltd announced today that its rail subsidiary GNER has entered into an
agreement with the U.K. Government's Department for Transport for a
management agreement to operate services on the InterCity East Coast
Mainline effective from 10th December 2006. This replaces the franchise
agreement with a management agreement, which is expected to run for a
period of up to 15 months to 31st March 2008. The franchise for InterCity
East Coast Mainline will be re-tendered, and the Department for Transport
has announced that it is inviting Expressions of Interest.
    Under the terms of the management agreement, the key financial rewards
and risks of the franchise agreement will pass to the Department for
Transport, and GNER will earn an incentive fee based on revenue and cost
performance. Sea Containers will continue to guarantee a performance bond,
at a reduced amount.
    Train services will continue to run as normal and tickets will continue
to be sold.
    GNER will continue to manage the business according to the service
standards to which it has committed under the May 2005 franchise agreement
and will continue to be committed to achieve the cost savings, as envisaged
in the original bid. It will also continue to deliver key passenger
benefits, including station improvements, re-engined and refurbished HST
trains and a half-hourly service between London and Leeds. Last month GNER
was voted Britain's Best Rail Operator in the inaugural British Travel
Awards and passenger satisfaction ratings are at an all-time high, at 90%.
    Bob Mackenzie, Chief Executive Officer of Sea Containers Ltd and
Chairman of GNER, commented: "GNER has a new management team in place which
is now delivering revenue growth in line with the original bid. While we
are not in breach of the current franchise agreement, GNER will not be able
to meet the significant increase in franchise premium obligations due from
May 2007. We would have preferred a renegotiation of the current contract,
but that was not available. The management agreement is therefore a
sensible solution for all parties. It enables GNER, which is recognised as
a first class rail operator, to continue to deliver the high level of
customer service for which it is known, and allow passengers to continue to
benefit from this commitment. It also limits the exposure for Sea
Containers, which is important in our financial restructuring process."
    "Our original bid was bullish, but we were knocked sideways by the July
2005 bombings, the hike in electricity prices and regulatory approval for
Grand Central, which will compete for our passengers calling at our
stations on the same line, but will not have the same charges imposed upon
them."

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