Eurotunnel revenue falls short

Eurotunnel dealt another blow to its long-suffering shareholders yesterday, admitting that revenues for 1994 had fallen short of projections made in October.

Analysts warned that a more serious concern was the admission that revenues for 1995, the first full year of operation, would be well short of the £525m the company had expected.

That could leave Eurotunnel in breach of conditions relating to a £700m banking facility due to be drawn down from April. It also casts down on whether the company can survive in its present form without some form of debt for equity swap to reduce interest payments.

Having seen the cost of the project balloon to an estimated £11.7bn, Eurotunnel is saddled with more than £8bn of borrowings and interest payments of more than £500m a year, 25 per cent of which are on variable rates and vulnerable to the rising cost of money.

Revenues from British Rail and SNCF, the French railway operator, for using the tunnel amounted to £30.6m in 1994 compared with a £34m projection in October.

That was itself 75 per cent down on the turnover forecast at the time of Eurotunnel's £816m rights issue last May.

Eurotunnel had sold the three-for-five rights issue to shareholders on the basis of projected revenues in 1994 of £134m, but delays to the start of Le Shuttle and Eurostar services through the tunnel meant those estimates were too optimistic.

The shares, which had recovered from their low of less than 200p last October, closed 8p lower at 298p. They reached a peak of in 1989 of the equivalent of 867p.

One analyst said, however, that with the break-even date moving ever farther out, the original plan for dividend payments to start in the year 2004 was unrealistic. He said there was a real danger that debt would grow faster than revenues, rendering the whole project unviable.

Despite the lost revenue, Eurotunnel said yesterday that its cash in hand was only £11m lower than forecast in the prospectus for May's rights issue.