Eurotunnel agrees to debt plan with creditors

3rd February 2006, Comments 0 comments

PARIS, Feb 2, 2006 (AFP) - Eurotunnel said Thursday it had reached a memorandum of understanding with major creditors on restructuring its nine-billion-euro debt.

PARIS, Feb 2, 2006 (AFP) - Eurotunnel said Thursday it had reached a memorandum of understanding with major creditors on restructuring its nine-billion-euro debt.

Eurotunnel, which operates the tunnel linking France and Britain, said it was seeking an extension of its waiver on debt payments until March 31 to allow talks to continue with the aim of finalising an agreement.

It gave no details of the deal.

Cost overruns and strong competition have prevented the company from generating the cash it needs to service and repay its massive debt, which has already been renegotiated.

"The MoU constitutes an essential step in the global restructuring of the debt," Eurotunnel said, noting that the ad hoc committee of major creditors represented more than 50 percent of the total debt.

"In the coming weeks, Eurotunnel will continue finalising the outline of the restructuring by presenting the MoU to the creditors not represented by the ad hoc committee," the company said.

Investment units in Eurotunnel surged after the deal was announced but later eased back on the Paris stock exchange to close 11.90 percent higher at EUR 0.47.

A general meeting of shareholders would be called to vote on the debt restructuring, Eurotunnel said.

Analysts cautioned that the deal still required the blessing of smaller debt holders and that the company's shareholders, which they said should not be taken for granted given the "tumultuous" annual meeting nearly two years ago during which rebel investors ousted the company's previous board.

Eurotunnel could still go bankrupt if shareholders decided to hold out for a better deal and fail to ratify the agreement at the proposed extraordinary general meeting, said Pierre Flabbee at Kepler Equities.

The ad hoc creditors committee includes the European Investment Bank and US institutions MBIA, Franklin Mutual Advisors and Oaktree Capital Management.

Standard and Poor's ratings service said the memorandum of understanding does not affect the "BBB" rating and CreditWatch negative status on the company's senior secured debt.

But the service reiterated its concern about whether a global agreement on the debt restructuring would be possible.

Copyright AFP

Subject: French news

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