COMMENT : Tunnel-builder tries to hold back the tide

Eurotunnel's bankers, or its British and Japanese ones at least, are going to have some difficulty knowing what to make of the appointment yesterday of two mandataires ad hoc to help the company find a way out of its difficulties. To the Anglo-Saxon mind, their purpose and authority is a bewildering one - it might even be described as "typically French" for, though appointed by the highest commercial court in France, the mediators do not appear to have any legal authority whatsoever. Their only powers are those of persuasion.

On the latter count, both are eminently qualified. Robert Badinter, a former French minister of justice, is a highly respected figure in French life while Lord Wakeham as chairman of the Press Complaints Commission has single-handedly proven that even the most toothless of watchdogs can sometimes be made to bark loud enough to deter. If anyone is going to persuade bankers to roll over and let Eurotunnel tickle their tummies, it will be Lord Wakeham.

That is the measure of the task, however. Bankers do not actually have to yield an inch, even under French insolvency law where other "stakeholders" such as employees and shareholders are meant to gain better protection than in Britain's more purist system. Theoretically, the French courts could back a restructuring which required bankers to yield security in favour of shareholders. But even if they did, it seems unlikely that the British courts, to which Eurotunnel is equally responsible, would go along with something that so directly challenged basic principles of creditor security.

Eurotunnel has three goals. It wants shareholders to retain a majority stake in the venture; it wants to stop the process under which banks indefinitely have first call on any available cash flow; and it wants banks to accept debt write-off and cuts in interest rates. In truth, Eurotunnel would have more luck with the tooth fairy than achieving these aims. Shareholders can only hope that Lord Wakeham can achieve some give in the apparently unassailable position occupied by bankers.

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