The Belgian state has increased its stake in the ailing Belgian rail freight carrier Lineas to 45 per cent through the government fund SFPIM. This is the result of a new capital injection of a total of sixty million euros into the rail company that has been making losses for years.

Lineas, which still describes itself as the largest private rail freight operator in Europe, has been close to bankruptcy due to years of losses. Last year, a rescue plan failed to raise another 100 million euros to get the railway company back on track financially. Ultimately, only twenty million was raised from the two shareholders. In addition to SFPIM, which once had a modest minority interest of ten per cent upon the privatization of Lineas, this also concerns the French investment fund Argos Wityu (55 per cent).

‘Cash is king’

The pair are now investing another thirty million euros in the ailing Belgian rail freight carrier. Together with the conversion of thirty million euros worth of bonds into capital, this should give the railway company enough financial scope to get out of the red zone before the end of this year and find a strategic and financially strong partner. According to an interview in the Belgian business magazine De Tijd with Lineas CEO Bernard Gustin, the bet is on a Belgian investor with at least fifty million euros in their pockets.

According to the general manager, “many positive conversations” have been held, “but it is difficult to find someone who will actually take the step and come up with 50 million euros. The more time passes, the more results I can show. But I also know: cash is king. The more time passes, the more cash problems Lineas has. Many funds say: ‘come back in six months’. That’s too late for us.”

Debt burden

Lineas has been making losses for years. Last year this amounted to 39.5 million euros on a turnover of 479 million. In 2022 the loss was 100 million euros. The debt burden is now more than 300 million euros. Yet Gustin was confident to the Belgian business magazine that Lineas will be back in the black.

“We are debt-free, we will break even this year, and we should be profitable again from 2025 onwards. By 2028, I expect a stable operating profit margin of six per cent to eight per cent. I am truly convinced that with Lineas, we have a European leader due to the combination of the specific company that Lineas is and the specific geographical location of our country. We also need to create those types of companies in other sectors for our economy.”

This article was originally published by our sister publication NT.nl.