A French court yesterday appointed two senior figures, Britain's Lord Wakeham and France's Robert Badinter, to try and break the deadlock between Eurotunnel and its bankers over refinancing talks for its pounds 8bn of debts.
The two men, both with extensive political and business experience, will mediate between the company, the 225 banks, and the two governments.
Eurotunnel, which recommended to the court that it appoint the mandataires ad hoc, said it hoped the banks would not view the move as confrontational. "They will simply be trying to create areas of common agreement," said Sir Alastair Morton, Eurotunnel's co-chairman. "They will circulate within the parties in an informal manner."
Lord Wakeham, the former energy secretary, is chairman of the Press Complaints Commission and a non-executive director of the merchant bankers NM Rothschild. Robert Badinter, a former French justice minister, is a law professor at the Sorbonne and still has extensive political connections.
Sir Alastair said Eurotunnel recommended the men to the French commercial court because they were "eminent, and had a strong track record." He had spoken to one of the UK lead banks involved in the refinancing: "They were happy with it," Sir Alastair said.
The appointment of a mandataire is covered by a 1984 French law on companies in difficulty, but has never been applied to an organisation the size of Eurotunnel, nor to a firm with such problems.
Any of the parties concerned can refuse to talk to the mandataire, although it seems unlikely that Lord Wakeham or Mr Badinter will be refused access.
The mediators can make proposals to the parties involved, but do not have decision-making powers. However, they can make recommendations to the court, which could make the terms of any agreement binding.
A mandataire is responsible to the company and shareholders first, then to the employees, then the creditors. One analyst said some banks may resent the intervention of another party, especially one that is likely to have the interests of the company at heart.
The appointment of a mandataire is usually seen as a first step in pre- insolvency proceedings and could therefore be regarded as a move to increase pressure on the 225 creditor banks to reach a settlement.
No timetable has been imposed on the mediators, although it was thought they would have "several months" to conduct their negotiations. Their salaries are paid by the French court out of costs awarded against Eurotunnel.
The company suspended interest payments on the bulk of its pounds 8bn debt in September for 18 months. In March the banks have a chance to vote on lifting that suspension.
Because the banks must reach unanimous agreement on the refinancing, negotiations with Eurotunnel have failed to produce a satisfactory plan. Sir Alastair said: "Perhaps the mandataire can get us to agree to something we never knew we could agree on. That is their job."
If the mediators fail, the next step might be to request the appointment of a conciliator under the 1985 bankruptcy code, who would have greater powers to force an agreement.
Eurotunnel also said yesterday that turnover rose from pounds 42.9m in the first quarter of 1995 to pounds 112.7m in the fourth quarter. Sir Alastair said he was confident that revenues this year would be "more than 50 per cent above those of 1995."
Since summer 1995, Eurotunnel's cash flow has covered not only its operating costs but also its further capital investment and payment of interest on more than pounds 400m of senior debt that is not in standstill.
Comment, page 21
Robert Badinter, 58, is a socialist senator best known for having abolished the death penalty in France while he was justice minister. A trained criminal lawyer and human rights activist, Mr Badinter, a close associate of Francois Mitterrand, was appointed justice minister and introduced many other big law reforms during his five years in the job. His appointment by Mr Mitterrand in 1986 as head of the Constitutional Council provoked a big political storm. It meant Mr Mitterrand had a confidant in charge of the supreme legislative court which ruled over the right-wing majority in the National Assembly. Mr Badinter remained in the job until 1995, when he was elected president of the court of conciliation with the European Security and Co-operation Conference. He was elected senator for Hauts- de-Seine in September 1995.
John Wakeham, 63, was nicknamed Mr Fixit during his 18 years at the top of the Conservative Party for his behind-the-scenes skills. During the 1980s he was seen as the archytypal Tory grandee; one of the men in grey suits who hold the real power. The former Chief Whip, Leader of the Commons, and energy secretary, was last year a controversial appointment as chairman of the Press Complaints Commission. Other jobs include chairman of shipbuilder Vosper Thornycroft, and non-executive at NM Rothschild. He became a household name after the 1994 Brighton bomb, which killed his wife and left him trapped for hours. His injured legs are said to still give him pain. Honest, and sometimes brutally frank, the former "minister for banana skins" during the Thatcher years will be ideal, said a former colleague: ''He just liked getting things fixed."