Chunnel banks irate

A DISPUTE has broken out in the wake of Eurotunnel's refinancing, with some bankers furious about the apparently favourable treatment of two of the company's closest advisers who came to the rescue with a last-minute pounds 50m top-up loan.

The terms of this loan - offered by Morgan Grenfell, the company's financial adviser, and the banking arm of SG Warburg, the company's broker - are far better than those offered to the 220-strong banking syndicate for the pounds 693m it has contributed to the pounds 1.6bn refinancing.

The row is part of the internecine bickering among the advisers and bankers who put together one of the most complicated and problematic refinancings in recent City history.

Disclosure of the loan emerged only in last week's prospectus for the pounds 858m rights issue. The Eurotunnel banks that put up new money did so in the expectation that they would be the most senior lenders, both in security and in the terms they received.

Sources close to the refinancing say that without this pounds 50m, Eurotunnel would never have raised sufficient debt to proceed with the pounds 858m rights issue. It had been made clear during the refinancing negotiations that the rights issue would not go ahead unless at least pounds 700m of debt was raised.

One banker said: 'This is the sort of thing that is remembered for a long time.' Another added that he might well vote against it.

If the loan goes ahead, Morgan Grenfell and Warburg will receive pounds 2.5m in fees between them and pounds 500,000 if it does not. They will also receive the cost of their money, plus 4 per cent on any money lent.

Graham Corbett, Eurotunnel's finance director, said that the offer required the approval of at least 65 per cent of the 24 lead banks, but might also need the approval of a wider group.

He added that the facility had been mooted for some time as a fallback. 'This facility was there in the wings, but we never intended using it,' he said.

Adding to the controversy over the refinancing, Mr Corbett said that Eurotunnel suspected that some financial institutions involved in the underwriting of the rights issue had sold shares in the days before it was priced. The share price fell 18 per cent in 10 days.

'There were clear indications that somebody was 'shorting' (selling in order to hedge against its underwriting exposure) our stock,' Mr Corbett commented.

The COB, France's financial regulator, is investigating recent share price movements after concern was raised by a French Eurotunnel shareholders' association. 'Let's wait to see whether the inquiry comes up with anything,' Mr Corbett said.

Banks and investment institutions shunned the refinancing. About 150 of the 220 banks refused to put up new money.

And SG Warburg Securities, the broker, managed to find sub-underwriters for less than half of the pounds 392m-worth of shares allocated to the UK.

Warburg declined to make any comment.

(Photograph omitted)

PROMOTED VIDEO
Arts and Entertainment
AKB48 perform during one of their daily concerts at Tokyo’s Akihabara theatre
musicJapan's AKB48 are one of the world’s most-successful pop acts
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Eminem's daughter Hailie has graduated from high school
music
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Super Mario crushes the Messi dream as Germany win the 2014 World Cup in Brazil

Super Mario crushes the Messi dream

Germany win the 2014 World Cup in Brazil
Saharan remains may be evidence of the first race war, 13,000 years ago

The first race war, 13,000 years ago?

Saharan remains may be evidence of oldest large-scale armed conflict
Scientists find early warning system for Alzheimer’s

Scientists find early warning system for Alzheimer’s

Researchers hope eye tests can spot ‘biomarkers’ of the disease
Sex, controversy and schoolgirl schtick

Meet Japan's AKB48

Pop, sex and schoolgirl schtick make for controversial success
Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor