Eurotunnel revolt met with scepticism in Britain

LONDON, April 8 (AFP) – The shareholder revolt, unprecedented in France, that led to the ousting of Eurotunnel’s mainly-British board was greeted with scepticism in Britain on Thursday.

The National Association of Pension Funds (NAPF), which represents British fund managers, warned that sidelining management of the Channel tunnel’s troubled operator could “pose a significant risk” to Eurotunnel’s restructuring plan.

“We had a number of concerns about the shareholders’ proposals and in fact recommended votes against them,” NAPF spokesman Andy Fleming said.

“One of the concerns we had was that their plan was to involve governments in helping the recovery of the company, which is against the terms of the founding treaty of the tunnel project,” he added.

The British and French governments on Wednesday insisted they would not be bailing out Eurotunnel, which is in debt to the tune of nine billion euros (10.96 billion dollars).

The Financial Times (FT) said both governments must bear a share of the blame for Eurotunnel’s woes as it was their state railways that produced the “wildly optimistic” traffic forecasts on which the company based its sums.

But Britain’s biggest-selling daily, The Sun, was scathing of French businessman Nicolas Miguet, who had rallied the dissident shareholders.

“Le Chump – Choker for chomping rebel who ousted Chunnel Brits,” screamed its headline as the paper went on to describe Miguet as having “crackpot notions” – later dashed – of being bailed out by the British and French governments.

In a vote, 63.4 percent of Eurotunnel’s mainly French shareholders ousted the board at a meeting near Paris on Wednesday – the first time in French history individual investors have toppled the management of a major listed company.

They also voted to put in place a new management team, headed by Jacques Maillot, former chairman of French tour operator Nouvelles Frontieres.

The dissident investors argued the former management’s so-called “Galaxie” restructuring plan would not significantly cut the group’s debt load and could ultimately lead to the firm’s creditors grabbing control of the company.

While welcoming the shareholders’ show of activism, Britain’s press agreed with the NAPF that the new management was unlikely to bring a change in fortunes.

“French shareholders show tunnel vision,” headlined an editorial in the FT.

“It was a victory for shareholder democracy but probably very costly to the one million French investors who hold more than 60 percent of Eurotunnel’s shares.

“They stand to be wiped out totally if, as seems likely, their new plan leads to default and to creditor banks taking over the company,” the business daily added.

It is estimated that just five percent of Eurotunnel’s investors are British.

The Guardian newspaper said the revolt was “the sort of shareholder democracy that ought to be encouraged in financial markets”.

However, it added: “But much like democracy elsewhere, such activism does not necessarily throw up the wisest or most efficacious results.

“This may have been a victory for small shareholders, but they may soon be getting even smaller.”

On a more optimistic note, The Independent predicted there would be no danger of the tunnel closing to traffic and said its competitive effect on the cost of flights and ferry crossings would continue.

Eurostar, Eurotunnel’s main client and the high-speed rail service linking Britain with France and Belgium, recently announced a 19-percent rise in passenger traffic during its first quarter compared with a year ago.