Cost of tunnel will be more than doubled: Eurotunnel plans to raise another pounds 1bn and schedules the opening for next May, one year over schedule
The news came as Eurotunnel announced plans to raise a further pounds 1bn from its banks and shareholders and lodge compensation claims for hundreds of millions of pounds against the British and French governments.
The official opening will be carried out by the Queen and Francois Mitterrand, the French President, who will travel in high-speed Eurostar trains from London and Paris and meet midway beneath the Channel for the formal ceremony next spring.
Eurotunnel executives stressed, however, that they expected to begin services well before that date. Sir Alastair Morton, chief executive, told the annual shareholders' meeting in London yesterday that services could be phased in between January and May of next year.
That compares with the estimate of the contractors, Transmanche Link, that no services will operate before 1 July next year.
Eurotunnel expects to be operating both freight and passenger shuttle trains before the grand opening. But the launch of through services by British Rail and its French counterpart, SNCF, will not begin until later next summer because of delays in delivery of the pounds 600m fleet of Transmanche Super Trains from GEC Alsthom.
Graham Corbett, Eurotunnel's chief financial officer, said that half the additional pounds 1bn in funding would be sought from shareholders and the other half from its banks.
The first call on shareholders could come in the form of a rights issue as early as spring next year to coincide with the start of services. If market conditions are not right Eurotunnel could raise up to pounds 200m by bringing forward to next June the exercise date for a bonus warrants issue, which was approved by shareholders yesterday.
There must be agreement from Eurotunnel's instructing banks by the end of November on how the additional finance will be raised. Eurotunnel said it expected to raise more than half the funds in 1994-95. However, it again ruled out any share issue before the tunnel opened.
Shareholders were also told that there was no end in sight to the pounds 1.3bn dispute between Eurotunnel and TML concerning cost overruns. Separately, Eurotunnel is indirectly in dispute with the consortium building its passenger shuttle trains, led by Bombardier of Canada.
But Sir Alastair said Eurotunnel would give in to neither set of contractors simply to get the project speeded up because the value of the contested claims was 15 times the net revenue Eurotunnel would forfeit even if the tunnel did not open until 1 July.
The claims against the two governments and their national railways relate to inadequate infrastructure on the UK side linking the tunnel to the rail network, late entry into service of through trains, excessive costs imposed on Eurotunnel by the intergovernmental safety commission and alleged unfair subsidies for rival ferry and airline operators.
Andre Benard, the Eurotunnel chairman, said one possible way of settling the claims would be for the the two governments to extend Eurotunnel's concession beyond 2042.
Mr Benard also told shareholders that Eurotunnel was examining the idea of bringing 'new partners' into the project. This is taken to be a reference to the possibility that some of its bankers might agree to swap debt for equity and that part of the eventual settlement with TML could include Eurotunnel shares.
Under the bonus warrant scheme announced yesterday, shareholders will be entitled to buy one new share at an exercise price of pounds 3.35 - a 20 per cent discount to Wednesday's close - for every 10 warrants held.
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