Eurotunnel anger as DoT seeks bigger profit share
Eurotunnel warned that a row with the UK and French governments over proposals to extend its licence to operate the Channel Tunnel could hamper the approval of its pounds 9bn refinancing deal.
Tuesday 23 September 1997
Patrick Ponsolle, the French co-chairman of Eurotunnel, said he had assumed the negotiations would be "fairly simple" and non-contentious, but the two governments were now seeking a bigger share of the company's profits during the extension period than the 25 per cent previously indicated. The DoT said it was "keen to improve" on the deal. "There have to be some benefits to the UK government and French government," said a spokeswoman.
Mr Ponsolle warned that Eurotunnel risked creating a false market in its shares if the restructuring plan was approved before the final deal on the operating licence. "We would have a substantial problem understanding how such a final agreement could substantially depart from what was indicated last spring," he said.
Georges Berlioz, the lawyer acting for one of the shareholders' action groups, said investors were likely to widen an existing legal claim in France against the refinancing package. "We are certainly reconsidering the position on the grounds that the information given to shareholders before the vote was misleading."
Jeff Summers, an analyst from debt traders Klesch & Co, said the DoT's demand for greater freight traffic through the tunnel was likely to influence the banks. "The logic of the DoT is commercial suicide for Eurotunnel. It suggests lowering charges for freight and that's the last thing they want."
Eurotunnel yesterday unveiled losses of pounds 323m for the first half of the year, down from pounds 372m a year ago, on revenues of pounds 230m, a rise of 12 per cent after adjusting for the surge in the value of sterling. It said it expected to make operating profits this year at least as big as the pounds 54m indicated in its most recent prospectus.
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