Shares plunge over Eurotunnel fears

Company denies crisis amid widespread City speculation it may file for bankruptcy

RUSSELL HOTTEN

and DAVID HELLIER

The precarious position of Eurotunnel was underlined yesterday after widespread City rumours that the Channel Tunnel operator had filed for bankruptcy.

Shares fell 6p to close at an all-time low of 77p after speculation started in Paris that Eurotunnel, co-chaired by Sir Alastair Morton, had called a press conference for this morning to announce its collapse. On the Paris bourse, Eurotunnel was off nearly 4 per cent, closing at Fr6.20.

Sources close to Eurotunnel's banks described the rumours as nonsense, while a Eurotunnel spokesman in Paris said they "were without basis." The company's press conference has been called to announce up-beat trading and forecasts.

The nervousness was fuelled by reports that the Japanese banks among the 220-strong consortium holding Eurotunnel's pounds 8bn debt are to sell a large part of their borrowings.

According to Klesch & Co, the secondary debt specialist which has been persistently bearish on Eurotunnel, many Tokyo-based financial institutions, hard pressed because of domestic problems, are expected to sell their borrowings by the end of March.

Eurotunnel's agent banks say they do not know if the Japanese banks have written off any debt. Eurotunnel had hoped to present a financial plan to banks by the end of January, although it is now increasingly likely that it will only be able to provide a progress update.

This expectation led many analysts to conclude that a complete debt restructuring was becoming increasingly difficult and that receivership may well be an option. The fact that the banks' adviser from Coopers & Lybrand was in Calais added weight to that theory.