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Eurotunnel to pay first dividend

Published on 05/03/2009

PARIS – Channel tunnel operator Eurotunnel said Wednesday it would pay its first-ever dividend after making a 2008 net profit of EUR 40 million despite fire damage of EUR 200 million.

The dividend, of four euro cents per share, will be the first since the company was created in 1986 and since trains began running beneath the channel between France and England in 1994.

Chief executive Jacques Gounon said 2008 clearly marked the end of financial uncertainty for the business, despite a fire in the tunnel in September that cut capacity by half for a while.

The group’s insurers paid EUR 44 million, after deduction of a claim penalty, on account of lost business. The group put the total cost of the fire at EUR 200 million.

The company, which has come close to bankruptcy and has restructured its debt several times, has 400,000 shareholders. The total dividend will amount to EUR 7.6 million, equivalent to about 1.0 percent of the value of the company on the stock market.

"This is really good news, a little ray of sunshine," said Colette Neuville, head of ADAM, a group of minority shareholders in Eurotunnel.

"Okay, four cents is not a lot but most shareholders hold several hundred shares," Neuville said.

Small shareholders, most of them French, bought the stock en masse in 1987 as a sure bet for steady returns but these high hopes were quickly dashed as the company struggled to repay its mountain of debt.

Since 2007, a radical restructuring programme has cut the debt progressively from EUR 9 billion to EUR 4 billion now.

Eurotunnel shares soared Wednesday in Paris on the news, jumping more than 18 percent to EUR 3.32 in a market rebounding more than 3.0 percent after recent sustained and heavy losses.

Dealers said the positive news was welcome in a market that has tumbled to multi-year lows in fallout from the worst global slowdown in decades.

Most companies have reported sharp falls in earnings over the last half of 2008 and cut dividends as a result, putting share prices under even more pressure.

"It is symbolic, the day’s top feature," one analyst told AFP.

"Shareholders have waited for this for a long time," he said, adding that at only four euro cents, the payout was still at the low end

Eurotunnel said its truck traffic had continued to fall, down by 46 percent at the beginning of this year following the fire, but passenger traffic had held steady.

The company began to recover in 2007, reporting a profit for the first time, of EUR 1 million.

AFP / Expatica