Eurotunnel talks debt deal to avoid disaster

30th March 2005, Comments 0 comments

PARIS, March 30 (AFP) - The board of Eurotunnel, the company operating the tunnel between France and Britain, said Wednesday it would seek to restructure the sea of debt that threatens to engulf the business.

PARIS, March 30 (AFP) - The board of Eurotunnel, the company operating the tunnel between France and Britain, said Wednesday it would seek to restructure the sea of debt that threatens to engulf the business.

The board will ask creditor banks for a waiver on debt payments to open the way for a restructuring of its debt - which amounts to about EUR 9 billion (USD 11.5 billion) - the company said in a statement.

Eurotunnel said it hoped for approval from a qualified majority of its creditors "as soon as possible".

Assuming approval is obtained, the group would begin restructuring talks "with the intention of reaching a financial arrangement that will ensure the future of the group whilst at the same time maintaining shareholder interests".

Those talks were expected to take eight months.

Eurotunnel Chairman Jacques Gounon has pledged to personally oversee talks with the 122 creditor banks of the Channel Tunnel operator a year after rebellious French investors threw out a British-dominated board and replaced it with executives chosen by small shareholder organisations.

He is to be assisted by Herve Huas, who will step down as deputy chief executive to become "special advisor to the chairman".

Huas will also remain a member of the board.

Shareholders dumped the old management in the hope that new blood would reorganise the business and renegotiate debt advantageously.

But a key figure in the new team, Jacques Maillot, has since resigned as non executive president and as a director amid tensions over strategy.

Gounon, a former senior civil servant, joined the board in December and became chairman on February 18. He is a former head of the private office of a junior transport minister.

Another former civil servant, Henri Rouanet, was recently made a director as well.

The decision to restructure Eurotunnel's debt had been expected for several weeks but a deal was delayed by discussions over the amount of fees to be paid to advising banks.

If Eurotunnel does not manage to restructure its debt it risks bankruptcy at the end of 2006.

It is widely assumed that the British government does not want to be involved in any rescue, and the French government has signalled that it too wants to stand aside.

The company has yet to give a date for the presentation of annual results which it usually releases in February.

Analysts say they expect a net loss for 2004 of about GBP 200 million (EUR 290 million, USD 374 million).

Construction of the tunnel was funded with equity bought mainly by French investors, many of whom were individuals investing savings, and by borrowing.

The project ran into construction and equipment problems and cost overruns. Despite previous debt restructuring, it has been unable to generate the cash needed to meet debt-servicing payments.

© AFP

Subject: French News

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