New doubts slice 22p off tunnel share price

HOPES OF a settlement in the long-running pounds 1.2bn cost dispute over the Channel tunnel suffered a setback yesterday after one of the contractors in Transmanche Link said that Eurotunnel had withdrawn its latest offer, writes Michael Harrison.

The announcement unsettled the City and sent Eurotunnel's share price tumbling to close at 488p, down 22p.

Robin Biggam, chairman of BICC, whose Balfour Beatty division is one of the 10 TML contractors, said he received notification from Eurotunnel's chief executive, Sir Alastair Morton, a few days ago that the cash and paper offer was no longer on the table.

BICC has made a further pounds 8m provision against losses on the tunnel project and the other contractors are expected to follow suit.

Total provisions made so far by TML members stand at pounds 120m.

Mr Biggam said that at present there were no serious discussions taking place with Eurotunnel and no signs of a settlement.

Later Mr Biggam added that TML had agreed to work to contract. 'On the project, we will fulfil our contractual obligation,' he said.

Eurotunnel said that a meeting on Tuesday with TML over the cost dispute had ended without agreement, but considered the talks as continuing.

'The talks have been going on since January,' a Eurotunnel spokeswoman said, adding that there would be another meeting with TML representatives next week.