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Shareholder vote stalls Eurotunnel salvage plan

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EFFORTS TO rescue stricken Channel Tunnel operator Eurotunnel were this week on hold pending the outcome of a key shareholder vote.

NCE understands that Eurotunnel's efforts to negotiate a deal involving Channel Tunnel Rail Link (CTRL) operator London & Continental Railways (LCR) are unlikely to progress until the vote has taken place.

Last month Eurotunnel warned it faced financial collapse within two years unless it could restructure its £6bn debt .

A group of dissatisfied French shareholders has tabled a motion to sack the board at the company's AGM on 7 April.

Meanwhile Eurotunnel is thought to have suggested a deal to the Department for Transport under which LCR would transfer the recently completed section one of the CTRL to the Channel Tunnel operator.

In return it is expected to offer LCR shares and lower track access charges for Eurostar trains using the tunnel.

Eurotunnel is thought to have justified the plan by saying reduced access charges would save LCR money. Such a deal could also give Eurotunnel access to revenue from the CTRL, which could help it restructure its debt.

But LCR is understood to be reluctant to negotiate unless the DfT offers it the chance to bid for a major project. It has already expressed interest in bidding for Crossrail.

It is thought LCR is holding off on talks until after the shareholders vote. If the Eurotunnel board is ousted, its share price is likely to collapse, strengthening LCR's hand.

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