Leasing chief shares mystery rail windfall

John Prideaux, chairman of the Angel train leasing company and a former senior board director of British Rail, has shared in a mystery windfall stemming from his part in the controversial rail privatisation process.

The special payout was made just before Christmas to a private consultancy company, Prideaux and Associates - in which Mr Prideaux has a third share, by GRS Holdings, the company formed by the Japanese banking group Nomura as a vehicle to bid for Angel in 1995.

Until now Mr Prideaux had been assumed to have come away relatively empty- handed from the rail sell-off in comparison with directors of the two other rolling stock companies, Porterbrook and Eversholt.

In February shareholders in Eversholt realised gains of pounds 386m by selling the business to the HSBC banking empire. The Porterbrook sale to Stagecoach last year brought profits of pounds 300m and netted pounds 36m personally for its managing director, Sandy Anderson. Angel was the only rolling stock company not to be sold to a management buyout team, although Nomura put in bids for all three during the privatisation process.

Nomura yesterday confirmed the windfall was to acknowledge advice from Prideaux and Associates given during a $2.2bn (pounds 1.4bn) deal put together by GRS last October, in which it bought another leasing operation in the US from the phone giant, AT&T.

Documents filed recently with Companies House give a clue to the unusual dividend distribution shared with Mr Prideaux in an arrangement which is understood to have been framed for tax reasons.

The documents show that on 23 December Prideaux and Associates was allocated 375 shares in GRS which it then sold back to the company on the same day for the nominal sum of just pounds 75. Another GRS shareholder, the California- based leasing advisory group Babcock & Brown, was allocated 2,500 shares which it also sold immediately, for pounds 500. In addition, a Gibraltar-registered company called Graylands appeared on the register with 520 shares, which were sold for pounds 104.

Although Nomura's use of GRS as a vehicle to make further acquisitions has been well-publicised, the existence and nature of these dividends remained a mystery. Last October GRS announced it had bought AT&T's leasing arm, AT&T Capital, for $2.2bn. The company employs 2,800 people involved in diverse leasing activities, including providing telephone equipment to 500,000 customers.

Guy Hands, Nomura director and chairman of GRS, said the GRS share allocations listed with Companies House formed a "dividend distribution to shareholders" following the success of the AT&T leasing company acquisition, which had been labelled "deal of the year" by Institutional Investor magazine. He explained: "We looked at last year and particularly in respect of the AT&T Capital deal and it justified making a special distribution."

Though Nomura confirmed the true scale of the payouts was not reflected in the figures listed in the documents, Mr Hands declined to elaborate on the real figures. "It's commercially confidential," he said.

Mr Hands also declined to give details of the Gibraltar company, Graylands, or why it was entitled to benefit from the windfall. He continued: "Graylands is a private investment company, that's all I can say."

Nomura argued that Prideaux and Associates had given useful consultancy advice during the AT&T deal "on the management side and in selecting possible targets". Yet Mr Hands admitted most of the input had come from David Banks, one of Prideaux and Associates' three shareholders. Mr Banks has recently been appointed to the AT&T Capital board. The other Prideaux and Associates shareholder, Allen Thomas, denied any involvement in the AT&T Capital deal.

It proved impossible to contact Mr Prideaux yesterday, although previous requests to discuss the payouts with him have been declined.

Companies House Research by Patrick Masters