Tunnel payments ruling is reversed

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EUROTUNNEL scored a twin victory yesterday after an arbitration panel ruled that it no longer had to make additional payments of pounds 50m a month to the Channel tunnel contractors, Transmanche Link, and its banking syndicate allowed it to continue drawing funds for another two months.

The decision of the arbitrators to reverse a disputes panel ruling in March that Eurotunnel must triple its payments to TML means that the monthly instalment will revert to pounds 25m.

The pounds 200m in additional payments made by Eurotunnel since then will now be set against the settlement the two sides reach in their pounds 1.29bn dispute over cost overruns on the pounds 9bn project.

Eurotunnel has been in technical default of its pounds 6.8bn loan agreement with a worldwide syndicate of 210 banks since the early part of this year.

Yesterday, however, the syndicate agreed to a further waiver, enabling Eurotunnel to draw down about pounds 100m between now and the end of November to keep construction going.

Eurotunnel's shares rose 10p to close at 420p on expectations that the ruling would go in its favour.

Sir Alastair Morton, Eurotunnel's chief executive, expressed satisfaction at the arbitrators' decision to reverse the disputes panel ruling.

TML, a consortium of 10 British and French contractors, said the decision 'may well give added impetus' to talks between the two sides over the cost dispute. After a year of negotiations Eurotunnel and TML are thought to have narrowed the gap to pounds 100m- pounds 150m.

The settlement is expected to involve a cash payment by Eurotunnel, coupled with an issue of shares to the contractors.

The arbitration panel, which sits in the International Chamber of Commerce in Brussels, also warned that when the disputes panel ruled on the separate issue of TML's pounds 1.29bn claim it should take care not to reach a verdict which might be overturned later.

News of the arbitrators' ruling comes five days before Eurotunnel presents its half-year report to shareholders which, for the first time, will include its own traffic and revenue forecasts. These are more optimistic than those of its traffic consultants.