Eurotunnel asks for more time on funding: Banks agree to put back deadline on additional pounds 1bn

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The Independent Online
EUROTUNNEL has been forced to ask its bankers for more time to reach agreement on an additional pounds 1bn of funding for the Channel tunnel, it emerged last night.

The Anglo-French tunnel operator had been due to finalise arrangements for the extra finance with its worldwide syndicate of 220 banks by yesterday.

However, in a statement issued in Paris after the financial markets had closed, Eurotunnel said its banks had agreed to put back the deadline to 4 January.

Eurotunnel said the delay was designed to give it time to resolve 'complex interlocking issues'. But the hold-up may arouse concerns that the project will cost more than the pounds 10bn Eurotunnel has budgeted for.

The latest forecast by the banking syndicate puts the total project costs at pounds 10.4bn. Eurotunnel said yesterday that the banks could want additional contingent funding - presumably of pounds 400m - to cover the difference.

In October Eurotunnel's chief executive, Sir Alastair Morton, announced plans to raise an additional pounds 1bn - with half the finance coming from a rights issue to shareholders early next year and the other pounds 500m from its bankers.

Eurotunnel is due to seek approval for the rights issue from its 630,000 shareholders at an extraordinary meeting on 15 December. The additional finance is needed to meet increased interest costs and loss of revenue caused by the one- year delay in opening.

Freight shuttle operations are due to begin on 7 March next year and passenger shuttle services on 5 May - the day before the state opening of the tunnel by the Queen and President Francois Mitterrand.

Eurostar through-rail services between London and Paris are not due to begin until next July because of delays to the pounds 600m fleet of Transmanche Super Trains ordered by British Rail and its French counterpart SNCF.

Eurotunnel resolved its long-running dispute with the tunnel builders Transmanche Link over their pounds 1.3bn costs claim earlier this year.

Meanwhile it announced last month that a settlement had also been reached over the pounds 406m compensation claim lodged by the consortium supplying the passenger shuttles, led by Bombardier of Canada. Details of that settlement are expected to be disclosed in the next few days.

Eurotunnel expects revenues next year to reach pounds 224m, rising to pounds 585m in 1995. But an opinion poll published this week cast doubts on the number of people who would use the tunnel because of fears about terrorism.

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