Eurotunnel debts may go for equity

RUSSELL HOTTEN

Eurotunnel's bankers are considering converting up to pounds 1bn of debt into equity as a partial solution to the Channel tunnel operator's financial crisis.

The company's 630,000 shareholders have long feared a debt swap, which would dilute the already diminishing value of their investment.

Last month Eurotunnel suspended interest payments of pounds 2m a day on junior debt for up to 18 months, a move that took many of the company's 225 banks by surprise.

Now there is a suggestion that the accrued interest of pounds 1.09bn be swapped for equity as a prelude to a more substantial refinancing. "The banks would like an interim solution to stabilise the situation," said a source. "Dealing with the interest first will buy time to organise a full refinancing later."

Two weeks ago, the Independent learned that the four agent banks had written to the banking syndicate telling it of the need for shareholders to take more of the pain caused by Eurotunnel's crisis.

The clear implication was that the shareholders' investment would have to be diluted, perhaps by a debt for equity swap that could wipe out the value of the shares which are held mainly by French investors.

A Eurotunnel shareholders' action group, based in Paris, recently claimed that about pounds 14bn had been wiped off the value of their holding since the company went public.

Several analysts believe a debt for equity swap of up to pounds 3bn is necessary. Gary Klesch, the debt trader, said recently that such a move would be needed by early 1998.

A spokesman for the agent banks - the UK's National Westminster and Midland, Credit Lyonnais and BNP in France - would not confirm the interest payment debt swap. "We have not fully dismissed any solution or way forward. But nothing has been agreed," he said.

The urgent need to resolve the company's financing was underlined yesterday when the giant US investment group, Capital, again cut its stake in Eurotunnel to 6.38 per cent. At the end of last month Capital reduced its holding to 7.11 per cent.

Meanwhile, figures out yesterday showed that the number of tourists taking cars through the Channel tunnel last month fell compared with the busy holiday month of August, but freight traffic has increased.

Cars travelling on the Folkestone-Calais Le Shuttle trains totalled 105,914 in September - a fall of nearly 40,000 on the 145,861 figure for August.

But coaches using the shuttles rose from 2,728 in August to 3,033 last month, while the number of Le Shuttle freight lorries increased from 36,517 in August to 38,136 last month, reported Eurotunnel.

The company also said that the number of through-freight trains travelling through the tunnel increased from 425 in August to 515 in September.

There was also an increase in the number of Eurostar trains which operate from London's Waterloo station through the tunnel to Paris and Brussels. With frequencies increasing, from 24 September, Eurostar ran a total of 862 trains in September, against 844 in August.

At rival P&O, freight truck crossings rose to 55,604 from 46,116, while its equivalent tourist vehicle figure slipped to 136,202 from 185,950. Richard Hannah, analyst at UBS, said Eurotunnel's figures were "more or less in line with the market, which is a bit disappointing for Eurotunnel really".

News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
PROMOTED VIDEO
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Sport
New Real Madrid signing James Rodríguez with club president Florentino Perez
sportColombian World Cup star completes £63m move to Spain
Travel
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Life and Style
News to me: family events were recorded in the personal columns
techFamily events used to be marked in the personal columns. But now Facebook has usurped that
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn