TheChek News Flow

Study shows it’s possible to increase capacity from 1,800 travellers an hour to nearly 5,000, says HS1

The owner of London’s St Pancras station has laid out plans to more than double the passenger capacity of the UK’s only international train terminal, taking advantage of booming demand for high speed rail travel.

Robert Sinclair, chief executive of HS1, which owns the station and the high-speed rail track running to the Channel Tunnel, said a study had found that space for international passenger numbers to increase from the current capacity of 1,800 an hour to nearly 5,000.

“There is an amazing opportunity for high speed rail connectivity throughout Europe, and we want to feed into that,” he told the Financial Times.

Several groups are exploring starting new services linking the UK and mainland Europe, while the incumbent Eurostar also has significant growth plans.

But St Pancras operates at close to capacity, and has emerged as one of the biggest obstacles to expanding the international rail market between the UK and continental Europe.

Passengers go through airport-style security, French passport control and UK government departure checks in the station before boarding international trains.

Eurostar was forced to run some trains a third empty after Brexit because queues caused by new passport checks threatened to overwhelm the limited space at St Pancras. Planned new EU biometric border checks threaten to further complicate the process.

Yet Sinclair said a study by consultants Active Thinking, commissioned by HS1, found that a huge rise in capacity was possible without rebuilding St Pancras.

He said that passenger numbers could grow to about 2,400 an hour in the next three to four years through changes including additional security lanes and staff.

In the longer-term, Sinclair said parts of St Pancras’s “international zone” would need to be redesigned for passenger numbers to approach 5,000 an hour.

This would include changing the layout of security and immigration, and expanding the departure lounge by 50 per cent. Many passengers would also wait on trains rather than in departure areas to free up space.

Still, Sinclair conceded the plan would need the French government to agree to providing more immigration officers, “which is not in our gift”.

Sinclair joined HS1 in March this year following six years at London’s City airport, which sells itself to business travellers as a seamless passenger experience including short waits to pass through the airport.

He said underpinning all of the changes would be “more of a focus on speed and throughput” at St Pancras.

“We want a ‘turn up and go’ arrangement. Not turn up two hours beforehand, get through security and wait in the departure lounge. This is a train station, not an airport,” he said.

HS1 charges train operators by the minute to run on its tracks, and along with Getlink, the operator of the Channel Tunnel, has long wanted to encourage more services between London and the continent.

Getlink earlier this year offered €50mn in support to encourage companies to open new cross-Channel rail services.

Sinclair said the new capacity at St Pancras could be used either by Eurostar, which has pledged to buy up to 50 new trains, or by a rival operator.

Sir Richard Branson’s Virgin Group, a consortium backed by the largest shareholders in Mobico, formerly known as National Express, are among five companies to have explored launching a rival service to Eurostar.

“Our high speed line has got 50 per cent spare capacity. You couldn’t make it up. There’s a significant opportunity that is sitting there waiting underutilised,” Sinclair said.

HS1 plans to launch the Active Thinking study in the coming weeks, before commissioning a more detailed architectural design for the planned changes to St Pancras.

Bausch + Lomb buyout teeters as Blackstone balks at price tag

Private equity group likely to drop out of consortium with TPG exploring bid for eyecare group

Blackstone has cooled on taking part in a joint takeover bid for eyecare company Bausch + Lomb, jeopardising one of the biggest leveraged buyouts in healthcare this year, according to people familiar with talks.

The private equity group in October teamed up with investor TPG to explore a bid for Bausch + Lomb. But Blackstone had subsequently balked at the frothy price expectations of the seller, the people said.

An auction process for Bausch + Lomb, which sells contact lenses, dry eye drugs and surgical ophthalmology equipment, began earlier this year as its heavily indebted parent company Bausch Health looked to pay down debt.

Two people close to the talks said Blackstone would probably drop out of the consortium, reducing the odds of a deal. Talks were ongoing and a deal could still be clinched if Bausch + Lomb was willing to accept a lower price or if TPG found another private equity group to act as partner on the deal, the people added.

Negotiations between Bausch + Lomb and the consortium were held as recently as the end of last week. Shares in Bausch + Lomb stood at just over $20 at Tuesday’s close, giving it an enterprise value including debt of more than $11bn. Bausch + Lomb’s share price had jumped 30 per cent since the Financial Times first reported in September that it had hired Goldman Sachs to run a sales process. However, the stock fell more than 9 per cent in after-hours trading following the FT’s report on Blackstone’s reluctance to join the bid.

Bausch + Lomb’s board — which includes hedge fund titan John Paulson and a representative of activist investor Carl Icahn, who are both major Bausch Health shareholders — had been hoping for an offer at a sizeable premium to $20 a share to get a deal over the line, but the consortium of TPG and Blackstone pushed back at offering such a high price.

The company is run by chief executive Brent Saunders, a well-known dealmaker who pushed the $63bn sale of botox maker Allergan to pharma group AbbVie, and is a close ally of Icahn.

TPG already owns an eyecare business — BVI Medical — and questions arose in due diligence about how it could be successfully combined with Bausch + Lomb.

Some 88 per cent of Bausch + Lomb is owned by Bausch Health, which has been struggling with a $21bn debt pile and a languishing share price left over from when it was previously known as Valeant. Valeant came under pressure from investors for accounting irregularities and a costly acquisition spree.

Bausch Health has been trying to spin off Bausch + Lomb as a listed company but the process faltered as Bausch Health creditors, including Apollo Global Management, Elliott Management and GoldenTree Asset Management, fretted over the impact it would have on the parent company’s balance sheet.

Blackstone, TPG and Bausch + Lomb declined to comment.

Bausch + Lomb has posted four quarters of about 20 per cent year-on-year sales growth, and its management is confident it can continue to thrive even if a deal falls apart, two people said. The eyecare company is projected by analysts to generate $872mn in earnings before interest, taxes, depreciation and amortisation this year on $4.7bn in revenues.

Bausch Health, meanwhile, is facing concerns about $10bn in debt that is set to come due before the end of 2027 — with the highest priority being a $2.4bn fixed-rate loan due next year.