Hold tight for a rough ride on Railtrack

Railtrack shareholders are strongly advised to pay the second instalment on their shares, due now, even if they are worried about the impact of the Government's planned windfall tax and want to sell.

Railtrack's shareholders should by now have received details of how to make this final payment on their shares. Payment notices and cheques need to be received from shareholders by this Thursday and if your shares are held on your behalf by a stockbroker you may have an even earlier deadline.

Railtrack shares have performed better than just about any other privatisation in their first year and investors will typically have made hundreds of pounds of profits on paper.

Small investors were offered the shares for 190p each when the company was privatised last May and by last week they had more than doubled in price to around 430p, having previously been as high as 500p. Shareholders should also have received two dividends amounting to more than 10 per cent of their original investment; that is, 13.75p a share in October and 7.3p a share in February.

Stockbrokers offer a spectrum of views for the future, although few are downright negative. But whatever the outlook, investors are strongly advised to make the second payment. If they do not, the partly-paid shares will be sold on their behalf by the Government, which will mean a poor price. The deadline passed last week for selling them off your own bat without being required to pay the second instalment. So if you still have the shares but do not want to continue holding them, you should make the second repayment and then sell.

However, Justin Urquhart Stewart, a director of Barclays Stockbrokers, thinks selling, even after paying the second instalment, is a bad idea because the share price has been held back by the approaching windfall tax, the details of which may not be known until Gordon Brown's first Budget, expected next month or in July. "There will be a better time to sell," he says.

Paul Killik of Killik & Co, a firm of brokers in London, is even more optimistic. He sees Railtrack as having more growth potential than many of the privatised utility companies. "Public transport has got to be the way forward," he says.

Other brokers, such as Greig Middleton, are more cautious, noting that the company faces a similar stiffening of the regulatory environment as other privatised companies while offering lower dividends in relation to the cost of the shares.

Investors might also be influenced by whether they opted for a discount on this final instalment price or bonus shares; investors were given this choice when Railtrack was privatised last year. Those who opted for the discount pay 175p a share rather than 190p for this final instalment, but those who opted for the bonus shares have to hold their shares until May 1999 to get the bonus, which will be in the form of one free share for each 15 held continuously until that date.

If, after paying the final instalment, you do decide to sell your shares, among those stockbrokers offering low selling charges are: CaterDeal (01708 742288); Investorlink (0800 289600); The Share Centre (0800 800008); The Share Market (0161 237 9443); and ShareLink (0121 200 2242).

q Railtrack has a helpline: call 0117 975 1593