Eurotunnel shares set for hair-raising ride on back of pounds 750m cash call

SHARES in Eurotunnel are set for a roller-coaster session today as the stock market digests reports that the company is to increase the size of an expected pounds 500m rights issue to between pounds 700m and pounds 750m.

After climbing rapidly over the last two months of 1993, the shares have dropped by more than 20 per cent from a peak 654p at the start of 1994 to 515p at the end of dealings last week.

Eurotunnel needs the rights cash to pay for cost overruns on construction and to make up for revenue lost because of delays in opening the Channel tunnel.

Delays to opening this summer could cost Eurtunnel more than pounds 100m in lost revenue. The tunnel is scheduled to open on 6 May, but only limited public shuttle services will be available through the summer season. A full shuttle service is not expected to be operating until the autumn.

The company declined to comment about the increase in the rights issue, which was revealed in the Independent on Sunday, but a source said the cash call would probably not happen until the middle of May. 'Eurotunnel is nowhere near fixing plans,' he said.

Investors have been braced for a cash call of about pounds 500m for several months, but an increase of more than pounds 200m could unsettle nerves in what has already been a very busy year for fund-raising.

It is understood that pounds 250m of the rights will be used to settle Eurotunnel's lengthy dispute over costs with its contractors.