THE problems besetting the UK’s privately financed light rail industry were underlined yesterday when the accounts of the heavily indebted Manchester Metrolink were finally filed at Companies House.

Altram Manchester, the off-balance sheet vehicle created under the Government’s Private Finance Initiative (PFI), showed a 54 per cent increase in full-year losses for the year to December 31, 2001 at £5.96 million.

Altram was created by Laing, Serco, 3i Group and others to run Manchester Metrolink, a service that has been popular with customers, although it has turned into a millstone for its backers.

Analysts have become increasingly concerned about the level of disclosure of the performance of PFI assets by the backers of PFI projects.

One analyst said: “It’s unacceptable that the accounts of the PFI vehicles are not coming out on time.”

Altram’s accounts, which show that the company has breached the terms of its banking covenants, were initially due to be filed in October last year but Altram has consistently failed to comply with Companies House deadlines.

Analysts say they need far more information about the cash flows of PFI investments to allow them to put accurate valuations on PFI businesses such as Laing.

Altram’s accounts, which show that it carried a net debt of more than £76 million at the end of 2001, reveal that Altram is in the process of handing the keys to the Metrolink service back to the Greater Manchester Passenger Transport Executive (GMPTE).

The accounts state: “The price currently negotiated with GMPTE for these assets will allow the company to repay its senior and senior subordinated lenders in full.”

Altram, which had senior bank loans amounting to more than £59 million at the end of 2001, faced interest charges of almost £7.8 million during 2001 although it made an operating profit of only £1.7 million.

The results highlight the high level of gearing within the off-balance sheet vehicles used in PFI projects.

GMPTE is terminating Altram’s running of Metrolink as part of a further extension of the service, allowing Altram’s backers to draw a line under their investment. In December GMPTE shortlisted two consortiums to build Phase Three of Metrolink and take over the running of the entire service.

Serco is trying to retain its involvement in Metrolink as a member of one of the bidding consortiums. Laing, however, is understood to be looking forward to walking away from the project.

GMPTE expects to announce the winner of the new contract in early 2004. Altram will continue to run the service until then.

Altram’s problems arise largely from over-ambitious forecasts of passenger numbers combined with some passengers using the service, but not paying. Companies such as Laing are reluctant to take on the passenger risk in tram projects, instead seeking to be responsible only for the financing, construction and maintenance.

Laing and Serco each has a 26.1 per cent stake in Altram, as does the Italian tram-maker Ansaldo Trasporti. 3i Group has a 21.7 per cent stake.