Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Eurotunnel faces debt drop defeat


CHANNEL TUNNEL operator Eurotunnel's plan to head off financial collapse by persuading its creditors to write off around ú4bn ($7.5bn) of its $11.8bn debt looked unlikely to succeed as NCEI went to press.

Eurotunnel chairman and chief executive Jacques Gounon told shareholders that he would fight for a debt write off, but a source close to Eurotunnel creditors ruled this out.

According to the source, a debt for equity swap was the only option likely to save Eurotunnel from going into administration.

This would involve creditors exchanging most of Eurotunnel's debt for new shares.

Gounon, backed by the shareholders, opposes this option on the grounds that such a move would further drive down Eurotunnel's share price. These are currently trading at under 20p (37c) each, but many shareholders paid as much as ú8 ($15) per share when the company floated on the London and Paris stock exchanges in 1987.

Gounon was confirmed in his post by shareholders at last Friday's annual general meeting, on the basis that he promised to oppose a debt for equity swap.

The company's debt restructuring proposal will be presented to creditors at a crunch meeting in mid July.

But if talks fail, creditors could take over the running of the Channel Tunnel, forcing Eurotunnel out of existence.

The creditor source argued that a debt for equity swap would allow the company to retain some profi ts and even pay a dividend rather than ploughing all of its operating profit into debt and interest payments.

Writing off some of the debt would still leave Eurotunnel with over ú2bn to repay, leaving shareholders with little prospect of a dividend before the end of the Channel Tunnel concession, said the source.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Please note comments made online may also be published in the print edition of New Civil Engineer. Links may be included in your comments but HTML is not permitted.