Delays threaten tunnel cash call

EUROTUNNEL's long-awaited pounds 900m rights issue was facing fresh obstacles last night as final preparations were made to underwrite the cash call among City institutions.

The issue is scheduled to go ahead first thing tomorrow morning amid concern among investors that the company is still short of the promised extra pounds 700m of banking loans it needs to survive.

Eurotunnel refused to give formal confirmation that the new loans were committed. In pre-marketing of the rights issue, however, it has been telling City institutions that the money is there.

A representative of the agency banks said last night: 'It's not my responsibility to comment on the numbers, but I am totally confident they will be able to go with their rights issue. I am going home very soon with a smile on my face and a spring in my step.'

Sir Alastair Morton, Eurotunnel's co-chairman, has completed a series of meetings with institutions, during which it was said the pounds 700m from the banks would be forthcoming, provided the rights issue went ahead.

Eurotunnel said last night that it would not make a formal statement about the banks' position ahead of the issue. Both Sir Alastair and Graham Corbett, the finance director, were locked in underwriting meetings.

Earlier in the day, the company's advisers received some good news as the price of the company's shares stabilised after days of steady falls.

The shares, dogged by the uncertainty over the rights issue, had fallen 18 per cent in 10 days. Yesterday, however, they recovered 5p to finish at 360p.

The exact pricing of the rights issue is still to be decided but advisers have settled on a discount of around 25 per cent to the market price, which would imply a price of around 270p a share.

Eurotunnel has permission from shareholders to issue up to 342 million new shares, which would allow it to raise just over pounds 900m at a price of 270p. That would take the total exercise up to pounds 1.6m, assuming the pounds 700m is in place.

The rights issue will not go ahead if the shares fall significantly today because the company would have insufficient authorised capital to raise the necessary funds.