Banks 'ready to seize Eurotunnel assets'

12th April 2004, Comments 0 comments

LONDON, April 11 (AFP) - Bankers will tell the new management of Channel tunnel operator Eurotunnel this week that they must prove their competence within three months or creditors will seize the business, the Sunday Telegraph newspaper reported.

LONDON, April 11 (AFP) - Bankers will tell the new management of Channel tunnel operator Eurotunnel this week that they must prove their competence within three months or creditors will seize the business, the Sunday Telegraph newspaper reported.

Rebel Eurotunnel shareholders succeeded last week in ousting the board of the troubled operator of the channel tunnel.

They also voted to put in place a new management team headed by Jacques Maillot, former chairman of French tour operator Nouvelles Frontieres, and also including Pierre Cardo, a lawmaker for the ruling right-wing UMP party. Creditors will warn the new directors that any signs that safety is a risk will lead to them being forced out, the paper said.

"We are watching the performance very carefully," one unnamed banker was quoted as saying.

"This is a seriously dangerous piece of kit and if there is the slightest hint that it is not being run correctly then the creditors will step in."

The lenders, which include HSBC, the European Investment Bank and Merrill Lynch, will meet the new directors this week for the first time.

The banks will tell the new management that any action that breaches Eurotunnel's credit agreement would prompt the lenders to seize control of the group, the paper said.

"Enforcement of security is something we won't do lightly because none of the banks particularly wants to end up running a tunnel," one of the bankers was quoted as saying.

"What has changed is that before Eurotunnel had a management team that was talking the same language as us, but the new board hasn't got a plan. And unless they change their spots they are not people we can do business with."

James Vaux, a managing director at Rothschild, an investment bank appointed to advise the lenders, told the paper an ad hoc committee of Eurotunnel creditors was being formed which holds a significant proportion of its debt.

International credit rating company Fitch pointed out last week that the company was legally bound to put the interests of creditors before those of shareholders.

It said that debt holders also had the right, arising from the terms of the debt, to hold their own board room coup and install their own management under certain circumstances.

Eurotunnel is laden with debts of EUR 9 billion (USD 11 billion).


© AFP
       
                                                                 Subject: French news

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