The week ahead: Eurotunnel's distress signal as it tries to keep banks on track

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The Independent Online
Eurotunnel will start formal negotiations with creditors this week over its pounds 6.4bn debt mountain. The troubled Channel Tunnel operator is expected to send out a so-called waiver to creditor banks, which is likely to lead, eventually, to a big debt-for-equity swap. Under company law, if a company begins serious negotiations on its debts, it is technically in default unless 75 per cent of the banks sign the waiver.

In a sign of how bad things have got, it is also expected to announce plans to delay the publication of its final results until March. Eurotunnel normally publishes in mid-February so the delay will worry shareholders and creditors, who are already nervous there may be more bad news to come on the state of the finances.

Eurotunnel is not the only under-pressure company likely to make the news, however. As well as annual results from Unilever - which will unveil a new strategy, a shake-up of the management structure and a hefty write- down - drugs giant GlaxoSmithKline will be revealing full-year numbers.

Two issues are dogging drugs companies - generic competition and growing concern over safety issues - and GlaxoSmithKline investors will want updates on both. Currency fluctuations are likely to hit earnings, with pre-tax profits falling from pounds 6.72bn to pounds 6.07bn.

However, it is not all doom and gloom at the UK's biggest drugs company. Take the currency problems out of the equation and the numbers should look stronger, while deal rumours continue to surround the group. Analysts have already speculated that AstraZeneca could be an attractive target for GlaxoSmithKline, while others believe that America's Eli Lilly is on the radar.

Regardless of which target GlaxoSmith-Kline eventually settles on, it is thought to be keen on securing a deal.

Among other heavyweights addressing the market, oil giant BP follows on from Shell's results last week with its fourth-quarter numbers. Investors will also be hearing from Barclays, household goods group Reckitt Benckiser, Rolls-Royce and BT.

Analysts expect the telecoms giant to post pre-tax profits of around pounds 532m, edging ahead from last year's pounds 526m. But of greater interest will be comments it makes on future strategy. Over the past few weeks, BT has been dropping hints that it is ready to develop its Global Services arm to offset decline in its fixed-line telecoms business. The division offers IT services to large corporates and competes with the likes of IBM. BT is expected to reveal that it is prepared to make a sizeable acquisition - possibly in the UK - to help meet its ambitions.

Barclays is the second bank to unveil its numbers in the sector's full- year earnings season. But surprises are unlikely as all the banks gave detailed trading updates before Christmas. Most expect Barclays' profits to move from pounds 4.12bn to around pounds 4.84bn, with strong performances from its Barclays Capital arm and international business offsetting a lacklustre domestic showing. The group is midway through restructuring its UK business, a move prompted by regulatory changes and market conditions. Investors will want an update on how this is going, as well as any news on costs.

Reckitt Benckiser - owner of Dettol, Harpic, Air Wick and French's Mustard, among many other brands - is set to build on its reputation for providing consistent, reliable growth. Full-year pre-tax profits are forecast to rise from pounds 660m to pounds 750m and net revenues by around 9 per cent, although currency fluctuations will be an issue.

A number of big-name companies overseas are also reporting. In the US, investors will hear from Cisco Systems, Pixar - the company behind Finding Nemo and Toy Story - and hotels group Marriott International. Mainland Europe, meanwhile, is particularly busy, with Puma, ABN Amro, Renault, DaimlerChysler, Ericsson, Volvo and Danone all due to report.

But it is not just a week for big names: back home a number of smaller companies will be reporting. They include online travel agency lastminute. com, whose shares dived last year after it revealed that fourth-quarter costs had more than doubled. Analysts will want more reassuring noises from management this time round, though first-quarter losses are expected to widen from around pounds 1.1m in the same period last year to pounds 4m now - mainly because of higher costs for staff cuts and office closures.

And, to round off a busy week, the world of economics will be bringing out the big guns when the Monetary Policy Committee meets on Wednesday and Thursday. However, most believe the Bank of England's interest-rate- setting committee will leave the cost of borrowing at 4.75 per cent, for the time being at least.


Tomorrow 7

UK: Results: (final) Pursuit Dynamics, Rangold Resources; (interim) Albermarle & Bond Holdings, Cambridge Antibody Technology, Invox.

Tuesday 8

UK: Results: (F) Alphameric, BP, Brandon Hire, Dobbies Garden Centres, Milestone; (I) Dicom, PZ Cussons.

Wednesday 9

UK: Results: (F) ARC International, Liberty International, Reckitt Benckiser; (I) Regent Inns.

Thursday 10

UK: Results:

(F) Barclays, GlaxoSmithKline, ICI, Rolls-Royce, Unilever; (I) Macro 4, McBride; (first quarter); (third quarter) BT, Scottish Power.

Friday 11

UK: Results: none scheduled.