Light at beginning of the tunnel after the longest night

WHEN a grim Eurotunnel board met at 3.30pm on Wednesday in the Great Winchester Street offices of its adviser, Morgan Grenfell, the prospects looked bleak as the directors settled down to decide the price of the rights issue, writes Peter Rodgers.

The stock market had suddenly plunged and only purchases by Swiss Bank Corporation, which was about to become the biggest underwriter of the stock, were keeping Eurotunnel's price stable.

Could they get the issue away at a price as high as 275p? Would they have to settle for 260p? Or would the bottom fall out of the market, forcing them to withdraw altogether? By 5.30pm, certain that the stock market fall had been contained, the board settled for 265p.

That was the signal for tough talks among the lead British underwriters about how to carve up the cake. They are six of the biggest names in the London markets - Morgan Grenfell, Swiss Bank Corporation, Banque Paribas, Robert Fleming, Salomon Brothers and SG Warburg.

They promised to take half of the pounds 858m issue if it could not be sold to existing shareholders. The rest was underwritten by eight banks in Paris.

The outline deals were not finished until after midnight, and the documentation later still, with Graham Corbett, finance chief, getting to bed after 4.00am. He was up again an hour later.

It was a tense night. Sir Alastair Morton, the co-chairman, said of the underwriters that 'well before midnight they were bickering about who got the most advantage.'

The underwriters stopped talking whenever he came into the room and only called him in when they needed him to telephone someone else using his persuasive powers.

The most intensive part had begun nine days before when Sir Alastair and a team of Eurotunnel executives began a hectic six meetings a day with investors in London and a visit to Edinburgh.

They used Sir Alastair's car, with three phones to keep in touch, had only 15 minutes between meetings, and got no crumbs of comfort from the investment managers they met. But SG Warburg, Eurotunnel's broker, followed up with increasingly persuasive phone calls.

Yesterday the effort paid off, when the British institutions agreed to sub-underwrite a quarter of the issue, taking the load off lead underwriters who signed the night before. Eurotunnel was home and dry.