Eurotunnel rescue plan approved

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The Independent Online

Eurotunnel, the troubled operator of the Channel Tunnel, looked to have narrowly avoided bankruptcy yesterday, after a French court approved a plan to halve its debt, and brushed aside lawsuits from 33 of the group's creditors.

The court granted the company 36 months to complete its restructuring plans, which will see its creditors paid less than half of the £6.2bn they are owed. At least 60 per cent of the company's investors will also have to agree to swap their shares for equity in a new parent company, to be called Groupe Eurotunnel.

The chief executive, Jacques Gounon, said he hoped that the company's shares, which were suspended last April, would begin trading again by the end of next month.

Eurotunnel has a large number of small private shareholders, and in the past has struggled to get attendance above 40 per cent at shareholder meetings. But in a conference call yesterday morning, Mr Gounon brushed aside concerns about turnout, saying shareholders would get nothing if they did not approve the deal.

In response to claims that some creditors disagreed that it was too late to stop the restructuring, Mr Gounon added: "I think they are wrong, and their advisers are poor performers. I think there is no chance at all that in the future they will be able to get something."

As well as approving the debt restructuring, the French court rejected appeals from 33 of the company's creditors. Although many are expected to appeal the decision, Mr Gounon said that they could not now derail the restructuring plan.

If successful, the plan will bring an end to 18 months of disputes between the company and its creditors.

Eurotunnel'sshares were suspended last year after its auditor's refused to sign off its accounts on the basis that they could not be sure the business would continue to exist as a going concern. The company then applied for creditor protection in August, after conceding that it may not be able to meet its debt repayments in 2007.

Under the restructuring plan, the group's debt will be reduced to £2.84bn, while the company will also issue some £1.28bn in convertible bonds. The company said it would also seek to secure tax breaks of up to €450m (£296m) from the UK and French governments.

Shares in Eurotunnel were first floated at the end of 1987, at a share price of 35 francs (£3.52). They were suspended last year at 29p.