19. As a result, a total of 139 vehicles for overnight rolling stock were ordered in late 1991 by European Night Services Limited (ENS), a cross-border joint venture company in which European Passenger Services Limited (now Eurostar UK) had a 61 per cent share. The other 39 per cent was divided between France, Germany and the Netherlands. The contract was worth £180 million and was placed with GEC Alstom Metro-Cammell (now Alstom Transport Limited). It was funded through a lease-purchase facility arranged with two UK banks and included a Government guarantee for ENS's share of the contract.
20. Night services did not, however, form part of the minimum requirement for the Link and it was left to bidders to decide on the appropriate level of night services to provide. By 1997, it had become clear to ENS that there was insufficient demand for overnight services to Europe. A global review of night services had also shown that there was not a profitable sleeper service in operation anywhere in the world. At around the same time, Alstom informed ENS that as a result of changes in the specification of the night rolling stock, the cost of completing the contract would increase by at least £100 million. In view of the expected low demand for an overnight Eurostar UK service, ENS concluded that it would not be good value for money to fund the additional cost and the lease arrangements were terminated in February 1998.
21. Because of Eurostar UK's on-going financial difficulties, ENS did not have sufficient funds to finance its share of the termination costs. If the Government's guarantee had not been called, the banks could have forced Eurostar UK into insolvency leading to the collapse of the Link project, which Ministers were at the same time trying to save. The Government therefore allowed the guarantee to be called. This resulted in the Department making payments to the banks totalling almost £109.5 million in June 1998. Provision was made, however, for the Department to recover some of the money if the rolling stock was resold by Alstom. Following negotiations, it was agreed that any profits from sales in excess of £14 million would be shared equally between the Department and Alstom. In addition, there is a counter indemnity in place from Eurostar UK so that the Department can recover the £109.5 million cost of the guarantee and accrued interest if Eurostar UK generates positive cashflows in the future. In January 2001, Alstom announced the sale of the rolling stock to a Canadian rail company for £13.8 million, just below the £14 million threshold for profit sharing with the Department.