Banks approve Eurotunnel's plan to restructure pounds 8.7bn debt mounta in

The Channel Tunnel operator Eurotunnel moved a step closer to financial survival yesterday after its banking syndicate unanimously approved the plan to restructure its pounds 8.7bn debt mountain.

The 174-strong banking syndicate is expected to sign the formal refinancing agreement in January, paving the way for Eurotunnel to swap pounds 2bn of its debt for equity in the spring. The restructuring will give the banks a stake of up to 61 per cent in the tunnel though existing shareholders could theoretically retain majority control through the exercise of two sets of warrants.

Eurotunnel obtained shareholder approval for the debt-equity swap in July. Yesterday's approval from the banks only leaves Eurotunnel waiting on the British and French governments to agree the terms on which they will extend its concession by a further 34 years to 2086.

Patrick Ponsolle, executive chairman of Eurotunnel, said: "If shareholders are to gain the full benefit of the restructuring, the British and French governments should now make a final decision on the conditions under which the concession will be extended."

The two governments want a share of profits over the period of the extension and an undertaking from Eurotunnel to increase freight traffic through the tunnel. But they are still divided on key elements of the deal.

The French have suggested that Eurotunnel give up 25 per cent of its extra profits. The British Government wants a bigger share of the pot than this and it also wants a concession from the French giving UK freight operators greater access to the French rail network.

Senior Eurotunnel executives said they were "guardedly optimistic" that agreement with the two governments would be reached around Christmas. "I do not see any insuperable obstacles," said one.

Under the financial restructuring Eurotunnel will exchange pounds 2bn of its debt for equity and equity notes at an issue price of around pounds 1.25. A further pounds 2.7bn of debt will be swapped for other forms of paper, reducing the stake of existing shareholders to 39.4 per cent.

At the same time Eurotunnel will issue new warrants to shareholders enabling them to take their holding back up to between 51 and 55 per cent. However, in order for the warrants to be exercised, Eurotunnel's share price has to more than double from last night's closing price of 62p.

The likelihood of approval from the lending syndicate strengthened markedly earlier this year after 20 per cent of the debt changed hands as a group of US banks moved in and a large number of Japanese banks bailed out. US banks now own a quarter of Eurotunnel's debts. The next biggest lenders are the French with 17 per cent of the debt.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: DBA Developer - SQL Server

£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Customer Service Administrator

£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

Recruitment Genius: Dialler Administrator

£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

Ashdown Group: Contracts Manager - City of London

£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen