Eurotunnel to lodge pounds 1bn claim: UK and France face massive payouts- Shareholders approve pounds 500m cash call

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The Independent Online
EUROTUNNEL is seeking more than pounds 1bn in compensation from the British and French governments and their respective railways to cover additional safety costs and lost revenues on the Channel tunnel.

The claim against the two governments is due to be lodged early next year and concerns the increased construction and operating costs imposed on Eurotunnel by the Channel Tunnel Safety Authority.

Eurotunnel's claim against British Rail and SNCF mainly relates to the delayed introduction of Eurostar through-rail services between London and Paris.

Eurotunnel is seeking additional damages from BR and the British government for their alleged failure to provide adequate rail services when the tunnel opens next May.

News of the claim came as Eurotunnel received shareholder approval for a pounds 500m rights issue next year to help meet escalating costs.

Authorisation for the share offer was gained at a 10-minute extraordinary meeting in London attended by just 49 of Eurotunnel's 630,000 shareholders. The rights issue will take place in March or April.

In all, Eurotunnel plans to raise pounds 1bn - with the other pounds 500m coming from its worldwide syndicate of 220 banks - taking its total financing to pounds 10bn.

Eurotunnel had been due to obtain the banks' approval for the refinancing last month but has been forced to put back the deadline until 4 January.

Sir Alastair Morton, Eurotunnel's chief executive, said yesterday that the talks were going 'hectically but well'.

He denied that the delay was being caused by doubts among its bankers over whether a further pounds 1bn would be sufficient, saying the hold-up was down to the 'sheer aggravated mechanics' of dealing with so many banks.

Eurotunnel will need the money to meet interest payments on its existing pounds 7.5bn credit facilities. It has shareholder approval to issue a maximum of 192 million shares at 40p nominal.

If Eurotunnel's claims against the two governments and railways succeed it would reduce the company's debts and interest payments considerably, enabling it to start paying a dividend earlier. At present shareholders are not expected to receive any payout before 2000.

Eurotunnel shares closed down 1p at 510p.