Eurotunnel wins 34-year extension

The British and French Governments last night agreed to extend Eurotunnel's concession to run the Channel Tunnel by 34 years in return for a share of the group's profits.

The settlement means Eurotunnel's licence to run the Tunnel has been extended from 2052 to 2086. The two governments will receive 59 per cent of any profits earned, including corporation taxes, after the original end to the concession. The anticipated extension was seen as critical to Eurotunnel's struggle to restructure its pounds 9bn debt burden with its lenders. A deal was finally reached a few weeks ago.

The UK authorities had been reluctant to extend the concession unless Eurotunnel promised to send more freight by to the Continent by rail. Announcing the agreement last night, John Prescott, Deputy Prime Minister, said Eurotunnel would limit charges to new rail freight operators.

Separately last night, Eurotunnel said it had settled its long running dispute with TransManche Link (TML), the consortium of construction companies which built the Tunnel.

The deal will see TML paying pounds 40m to Eurotunnel and drop all remaining claims against the operator.