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)

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
news
Sport
Chelsea midfielder Cesc Fabregas
footballChelsea vs West Ham live kicks off coverage of all 10 of Boxing Day matches
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
News
news
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
Latest stories from i100
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all