Eurotunnel faces end of line for real this time

31st July 2006, Comments 0 comments

PARIS, July 31, 2006 (AFP) - The trans-Channel link operator Eurotunnel should learn Wednesday if a Paris court will hold creditors at bay while it pursues increasingly urgent efforts to halve its debt mountain.

PARIS, July 31, 2006 (AFP) - The trans-Channel link operator Eurotunnel should learn Wednesday if a Paris court will hold creditors at bay while it pursues increasingly urgent efforts to halve its debt mountain.

Sources close to the matter said Monday that a solution had not yet been found for the EUR 9 billion in debt that threatens the operator of twin tunnels between France and England with liquidation.

The Paris Commercial Court is to decide whether to grant safeguard measures that would freeze repayment by the Franco-British company while allowing it to continue operating.

In any event, observers say, it is unlikely the crucial land link would shut down.

But Eurotunnel has warned that if a plan to halve and restructure its debt is not agreed by the end of September, it will be destined for liquidation.

The business has enough cash flow to keep operating until the beginning of 2007, and experts therefore expect trains to run through the tunnel for the foreseeable future.

If the court accepts the debt-protection application, it would also appoint one or two officials to negotiate a settlement, so that talks could continue in a legal framework.

The negotiations have been under way for 15 months in the aim of preventing bankruptcy in about six months when Eurotunnel is to begin paying off the capital of its debt.

Liquidation could be avoided if the main creditors, namely the banks that lent Eurotunnel money to finance the Channel Tunnel project, took over the company to reimburse their debts, chief executive Jacques Gounon has explained.

Magistrates at the Paris court said last week they needed eight more days to consider the case, owing to its complexity and the number of rulings required, according to Eurotunnel lawyer Jean Veil.

The group, which has asked for safeguard measures similar to US Chapter 11 bankruptcy protection, hoped creditors would reach an accord on their own by Wednesday.

"This extra delay allows negotiators to sit down and find a solution in the meantime," Veil told AFP last week.

The company had said in a statement there was an "implicit consensus" that its sustainable level of debt was about 2.9 billion pounds and that existing shareholders must retain a significant proportion of the equity.

Eurotunnel's debts are split between three categories of creditors: senior (EUR 532 million), junior (EUR 5.77 million) and "subordinate", or bondholders (EUR 2.7755 million).

Debts would be reimbursed in that order.

Copyright AFP

Subject: French news

 

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