By Rob Hargreaves Hargreave Hale Ltd THE shock news of the week has been the Government's decision to pull the plug on Railtrack plc and put the company into administration.

The announcement came on Sunday and caused outrage among shareholders, who could stand to lose all their investment.

In the City, some of the largest shareholders could lose millions and are considering legal action. The shares were suspended at 280p, Friday's closing price.

Anger

To add further to the anger, HSBC also froze £370 million of cash belonging to Railtrack's parent, Railtrack Group, which itself is not in administration, due to Railtrack plc owing it money.

Railtrack executives began proceedings against HSBC, who are still refusing to release the money, hoping that this money would be made available to shareholders, which would equate to about 70p a share.

The Government has since said it would consider various ways of making some money available to shareholders.

Railtrack has tried to argue that the Government should compensate its shareholders to the amount of 360p a share, which would cost the Government £1.85 billion.

There are about 255,000 Railtrack shareholders with 515 million shares. The 360p figure is about the same as the shares cost at privatisation.

Private shareholders have claimed that they were misled by the Government in the initial flotation and were under the impression that the Government would support the company.

The whole affair has caused a huge rift between the private sector and the Government and will undoubtedly affect future partnerships.

The saga continues and it may be some time before a shareholder payout figure, if any, is reached.

Moving away from Railtrack, the rest of the market has recovered well this week, as the terrorist war has got underway and most sectors have seen a decent rally.

Among the retail sector, Marks & Spencer, announced that its falling sales over the last three years appeared to be stabilising and that it could be about to turn the corner.

This optimism was enough to see a surge in its shares. There are also hopes that the new, much-hyped range from George Davies, will boost sales. Marks & Spencer has been the best performing blue-chip stock this year.

Finally, Arcadia, the high street fashion retailer, is selling its Warehouse, Racing Green, Principles and Hawkshead brands in a £35 million management buyout deal.

This will allow Arcadia to focus on developing its six remaining brands, including Dorothy Perkins, Top Shop and Burtons.