Hopes fade of tunnel deal this week

Hopes that Eurotunnel will be able to report a deal over its pounds 8bn debts at its annual meeting in Paris on Thursday have faded.

But negotiations with the company's top banks have never the less made progress in the last few days, leading to expectations that the two sides will be able to present outline plans to the rest of the banking syndicates next month.

Sir Alastair Morton and Patrick Ponsolle, the co-chairmen, will be under strong pressure from hundreds and possibly thousands of angry French shareholders packed into the Palais des Congres to give a progress report on the talks.

They may be unable to stay silent on progress, but at this stage the company is hoping not to have to give hostages to fortune by giving any detailed assurances.

It is thought that Eurotunnel and its creditors are in reach of an agreement that will hand more than 40 but less than 50 per cent of the equity in the company to its lenders, considerably more than the one-third stake that the company first pitched for.

In return for a lower immediate stake in the shares, the banks may be able to switch some of their debt into tradeable bonds and into convertible loans. The latter will be converted into equity if Eurotunnel fails to meet new financial targets.

The Eurotunnel share price has risen strongly over the last few weeks from 62p to 105p, valuing the company at just under pounds 1bn, as shareholders banked on a favourable deal.

Among the items needing to be cleared up before a deal can be struck is agreement on lengthening the 57 year franchise, a move suggested to the British government by Jacques Chirac, the French President. Although the UK was initially cool to the idea, it seems likely to back it as a cost-free way to the governments of giving the banks more certainty they will eventually be repaid.

Eurotunnel is also likely to win its demand for a lower interest rate on the debts, which will be rescheduled to delay capital repayments until the company is in a stronger financial position.

Sir Alastair and Mr Ponsolle have been arguing strongly for a reduction in the cost of the loans which were fixed at the rates needed to finance a speculative construction project. Now the tunnel is completed and working, they argue, a lower interest rate is appropriate.

There was a clear indication last week that the negotiations will continue into next month, when Jean-Pierre Mattei, president of the Paris commercial court, said he would decide soon on a possible extension of the mandate of the two mediators appointed by the court, Lord Wakeham and Robert Badinter. Their original appointment runs out at the end of June, and he said it would be continued if there were reasonable chances of a solution.

He also made clear that if talks failed and Eurotunnel went bust it would create a "legal monster", particularly if the banks try to enforce their contractual right to take over the tunnel operations from Eurotunnel, known as substitution. Mr Mattei said the mediators had tried to impress on the banks "that there have to be other solutions than invoking the substitution clause".

An outline agreement with the four agent banks, NatWest, Midland, Credit Lyonnnais and Banque Nationale de Paris, will probably take until the end of the year to finalise. The agents may not announce proposals until they have the backing of the rest of the 25 lead banks.

PROMOTED VIDEO
News
people
Arts and Entertainment
Jake Quickenden and Edwina Currie are joining the I'm A Celebrity...Get Me Out Of Here! camp
tv
News
i100
Life and Style
fashion
News
videoJapanese prepare for the afterlife by testing out coffins
Arts and Entertainment
Harrison Ford attends Blade Runner at Target Presents AFI's Night at the Movies at ArcLight Cinemas on 24 April, 2013 in Hollywood, California
film... but Ridley Scott won't direct
Sport
Hughes is hit by a bouncer from Sean Abbott
cricketStephen Brenkley on batsman's tragic flaw that led to critical injury
Sport
Dejected England players applaud the fans following their team's 3-0 defeat
football

News
people

Actress isn't a fan of Ed Miliband

News
ebooksNow available in paperback
News
The Bounceway, designed by Architecture for Humanity
newsLondon to add 'The Bounceway' to commuting options
Life and Style
Stefan Gates with some mince flies
food + drink
Arts and Entertainment
Rooney Mara plays a white Tiger Lily in forthcoming film Pan
filmFirst look at Rooney Mara in Pan
Life and Style
Customers browse through Vinyl Junkies record shop in Berwick Street, Soho, London
tech
Life and Style
health

Do you qualify – and how do you get it?

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

h2 Recruit Ltd: Business Development Manager - HRO - £70k+ ote

£35000 - £450000 per annum + £3k car, £70k ote: h2 Recruit Ltd: Do you want to...

Citifocus Ltd: Newly Qualified Accountants - Risk Mgmt

£Attractive Package: Citifocus Ltd: Prestigious financial institution seeks to...

Citifocus Ltd: Operational Risk Analyst

£Negotiable: Citifocus Ltd: Experienced operational risk professional with ban...

h2 Recruit Ltd: Business Development - Telecommunications - £50,000 OTE

£25000 per annum + £50,000 OTE: h2 Recruit Ltd: London, Reading , Southend, Al...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
Phil Hughes head injury: He had one weakness – it has come back to haunt him

Phil Hughes had one weakness – it has come back to haunt him

Prolific opener had world at his feet until Harmison and Flintoff bounced him
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital