Shareholder vote to bury Eurotunnel board

PARIS, April 7 (AFP) – Shareholders in Eurotunnel met Wednesday in a revolt likely to sack and replace the current board of the debt-ridden Channel rail tunnel operator.

Earlier, the man named to restructure the company withdrew, and the French and British governments stressed that they would not provide state aid.

With support for the current board looking weak, a former Club Med and Euro Disney chief who was to take up the chairmanship of Eurotunnel, Philippe Bourguignon, said he had decided to turn down the offer.

Tension gripped the opening of the general shareholders meeting in Villepinte, a Paris suburb, where about 5,000 shareholders were expected personally to cast their ballots.

Anger by shareholders at the long-term slump of their investment fomented a rebellion that was climaxing in Wednesday’s vote to decide who will run the British-French company.

Rebel leader Nicolas Miguet, a French investment adviser and would-be right-wing politician, was greeted on his arrival with cheers, while the management team was subjected to condemning whistles.

Rebel shareholders oppose the team led by chief executive Richard Shirrefs, which has proposed a financial and operational restructuring to rescue the ailing company.

The rebels back an approach that could see the debt shared by public bodies on grounds that while Eurotunnel is a private concern, the tunnel is in essence a public works project.

If successful, the rebellion by individual shareholders, most of whom are French, would be the first in France at a major, listed company.

Bourguignon, who had been nominated only last month to replace current chairman Charles Mackay due to retire on October 29, announced his decision on radio only hours before the shareholders meeting.

With Bourguignon out of the picture, the former head of French travel group Nouvelles Frontieres, Jacques Maillot, emerged as the most likely candidate take up the chairmanship of the company.

With figures from Eurotunnel showing late Tuesday the rebel shareholders controlling 20.49 percent of the British-French company’s capital, compared to only 8.3 percent for the directors, even Shirrefs was downbeat about the board’s prospects for holding on to power.

In an interview with the Wednesday edition of Le Figaro newspaper, he resigned himself to say: “Our chances of winning in face of this campaign are narrow.”

Both the British and French governments squashed hopes of state aid for the company.

In London, the British government reaffirmed its longstanding position that no public money would be spent on the company, a principle laid down by Margaret Thatcher when she was prime minister and the project was being mounted.

The newly appointed French government shared the British view, saying the revolt was a “private matter”.

France and Britain agreed in 1986 that state aid would not be used for the tunnel linking northern France and southern England.

Shares in the company were issued in 1987 at 35 French francs, the equivalent of EUR 5.33, and reached a high of 127 francs, or EUR 19.36, before beginning a long downward spiral.

But with a management overhaul in sight, investors bid the company’s shares up 10.71 percent in midday trading to EUR 0.62. A trader said current management “is not in a position to do anything. Change is good.”

“Maillot has credit with the market, he’s a respectable name and it would be good to see him as chairman,” the trader added.Eurotunnel has more than one million shareholders, of whom 900,000 are French.

The company has already been rescued once through a restructuring of its debt which diluted the interests of small shareholders. Now more than one million small shareholders own 65 percent of the shares, investment funds 29 percent and banks 6.0 percent.

But the company is at the mercy of its debt. A US reassurance company MBIA holds 31 percent of the votes among creditors, the banks behind the original financing, most of which are French, hold 30 percent and hedge funds hold 38 percent.

If successful, the rebellion by individual shareholders would be the first in France at a major, listed company.

Subject: French news