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Nat Ex loses East Anglia line

EMBATTLED transport group National Express was dealt a further blow yesterday, after the Department for Transport (DfT) said it would take back its East Anglia franchise early.<br /><br />The government, which franchises the lines out to operators like National Express and FirstGroup, will take the line back on 31 March 2011, it said, rather than extending the contract until 2014. <br /><br />The move comes after National Express defaulted on its East Coast Main Line franchise earlier this year, as it struggled to deal with a slump in passenger numbers in the downturn.<br /><br />It said yesterday it was&nbsp; &ldquo;disappointed&rdquo; with the decision, but that it had been expected. Lord Adonis, the transport secretary, said the search was now on for a new operator so a smooth changeover could take place next April.<br /><br />The East Anglia line runs from Liverpool Street through to Norwich and Peterborough.<br /><br />National Express handed the East Coast line back to the government earlier this month, after failing to renegotiate its contract with the DfT. It was supposed to pay &pound;1.4bn over seven years from 2007. <br /><br />Chief executive Richard Bowker stood down over the incident, while the government then said it was &ldquo;unacceptable&rdquo; for the company to keep up its other franchises, East Anglia and c2c. The East Coast line will now be state-run until November 2011.<br /><br />Earlier this week, the DfT kicked off a bidding timetable for the c2c franchise, due to be renewed in May 2011.<br /><br /><strong>DOUGLAS MCNEILL<br />ASTAIRE SECURITIES<br /></strong>The news that National Express is being stripped of another franchise comes ahead of today&rsquo;s extraordinary meeting of shareholders to decide on a rights issue at the company. <br /><br />It wants to launch a &pound;360m cash call to deal with its debt mountain, but dissident shareholders &ndash; led by the Cosmen Family &ndash; have objected to the plans.<br /><br />Douglas McNeill at Astaire Securities says the announcement from the government yesterday could have marginally helped Nat Ex win support for a rights issue, as its brings more clarity to the company&rsquo;s future, but that many shareholders will already have made up their minds. McNeill added that the Cosmen family&rsquo;s recent acquisition of extra shares wasn&rsquo;t necessarily a move to sway tomorrow&rsquo;s vote, and that the latest tranche bought, on Tuesday, may not even be in the family&rsquo;s portfolio in time for the extraordinary meeting.