Eurotunnel urges shareholders to accept debt plan

24-08-2006

Eurotunnel has warned its shareholders that the Anglo-French company will go bust unless investors accept a debt-restructuring deal announced yesterday.

The Channel Tunnel operator claims the proposed rescue plan would cut the firm's debt by 54 per cent, from £6.4 billion to £2.9 billion.

The plan, underwritten by international banks Goldman Sachs, Barclays and Macquarie, would see the joint French and British enterprise replaced by a French holding company.

The new incorporated company would be listed in London and Paris, while a separate UK subsidiary would be established to take on Eurotunnel's debts.

At a Paris press conference Eurotunnel chairman Jacques Gounon warned that a failure by shareholders to accept the deal would result in the company's bankruptcy.

"I'm not trying to scare people, I'm just being honest. For Eurotunnel as a listed company, it would be the end," he said.

Mr Gounon also stressed that the move was necessary to create a more simplified structure for the company, arguing that the establishment of single nationality corporate identity was necessary to secure the refinancing of the firm.

Eurotunnel's bondholders and shareholders will be given the opportunity to vote on the deal at the company's delayed annual general meeting on July 12th, with the restructuring plans set to be complete by the autumn, if accepted.

However, one committee of bondholders, representing £1.2 billion of the company's debt, has already rejected the proposed rescue plan as "overly complicated and wholly unattractive".

In a statement ARCO said: "The bondholders will not be held to ransom by the company's threat of bankruptcy as it is not the only alternative."

"They would like to remind the Eurotunnel board of its legal duties to all categories of stakeholders."

Eurotunnel has faced financial difficulties since the opening of the Channel Tunnel in 1994.

Last year the company cut 900 jobs in an attempt to reduce costs.



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