New Eurotunnel board calls for state aid

VILLEPINTE, France, April 7 (AFP) – Eurotunnel shareholders on Wednesday voted to oust the board of the troubled operator of the channel tunnel, the first time individual investors have toppled the management of a major listed company in French history.

A crushing majority of 63.4 percent of the shareholders voted to oust the board after a tense annual general meeting just outside Paris that lasted over eight hours and was attended by 2,000 people.

The shareholders also voted to put in place a new management team headed by Jacques Maillot, former chairman of French tour operator Nouvelles Frontieres, and also including Pierre Cardo, a lawmaker for the ruling right-wing UMP party.

The dissident shareholders at the French-British company had been rallied by French businessman and presidential candidate Nicolas Miguet, along with the Adacte association of Eurotunnel investors.

“Today, in Villepinte, shareholder democracy has expressed itself fully.
It’s a historic moment,” said regional UMP deputy Richard Mallie in a statement.

However Maillot warned that the task ahead for the heavily indebted company, which saw its shares rise over seven percent in late trading ahead of the decision, would be far from easy.

“We are convinced that the game has not been won, far from it, we must start to make numerous decisions with all the partners of Eurotunnel and follow the solutions that are offered to us,” he told shareholders.

“Without knowing the detail of the company’s situation, we can guarantee nothing but our ultimate goal is to restore shareholder confidence in the company they believed in.

“The message of the shareholders is clear: we must not delay in getting to work to save Eurotunnel,” he said.

The shareholders had rejected all the resolutions put before them at the annual general meeting, including motions to approve the accounts and to re-elect chief executive Richard Shirrefs.

The motion for Shirref’s re-election attracted just 36.12 percent of votes and that for board chairman Charles Mackay’s, 32.46 percent.

The company issued a statement acknowledging the shareholders’ decisions.

The dissident investors argued the former management’s so-called “Galaxie” restructuring plan will not significantly cut the group’s EUR 9 billion
(USD 10.96 billion) debt load and could ultimately lead to the firm’s creditors grabbing control of the company.

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 derisory whistles.

The rebel shareholders oppose the restructuring plan by CEO Shirrefs and his team.

They 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.

Both the French and British governments have stressed they would not provide state aid.

In London, the British government reaffirmed its long-standing 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.

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.