Tunnel banks to propose debt swap

Banks negotiating with Eurotunnel over an pounds 8.1bn debt reconstruction are expected next week to propose an immediate swap of part of the debt for 49 per cent of the equity in the company.

Reports from Paris last night said the four lead banks, including NatWest and Midland, are to start talks with Eurotunnel next week on the plan.

A proposal from the banks to take just under half the equity in the company is less tough than some shareholders had feared, against a background of cash surpluses that are a fraction of the interest bill.

Eurotunnel sources indicated that no proposal had yet been made to the company, and it is not clear whether it would accept a 49 per cent swap.

There had been suggestions that the banks would insist on taking anything up to 90 per cent of the company from shareholders in return for agreement to restructure the debt, on which interest payments were suspended last September.

The Paris sources said the debt restructuring agreement was reached last Sunday among National Westminster Bank, the HSBC Holdings subsidiary Midland Bank, Banque Nationale de Paris, Credit Lyonnais, the European Investment Bank and the European Coal and Steel Community.

The lead banks are believed to have already won agreement on their proposals from the larger group of 25 instructing banks overseeing the financial reconstruction talks, which are due to begin next week.

But they now have to enter detailed negotiations with Eurotunnel, the company co-chaired by Sir Alastair Morton and Patrick Ponsolle.

Eurotunnel has drawn up its own proposals, thought to envisage a limited debt-for-equity swap combined with a flexible plan to share the growing revenue from the tunnel between bank creditors and shareholders over the years ahead.

Assuming agreement is reached with the Eurotunnel board, the banks will then have to sell the deal to the rest of the 225-strong banking syndicates that have lent the pounds 8.1bn of junior debt in question. The syndicates have to deliver a 100 per cent vote in favour of the restructuring proposals.

The balance of the pounds 9bn debt is held by senior lenders whose interest payments are not part of the 18 month standstill announced last September.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral