Tunnel seeks a longer franchise

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The Independent Online
Eurotunnel yesterday indicated that it might not get support for the rescheduling of its pounds 8.7bn debt mountain unless the British and French governments agree to a "substantial" extension of its concession.

The Channel Tunnel operator yesterday submitted a formal request for the franchise to be lengthened from the present expiry date of 2052. The company is thought to be looking to extend the concession from 65 to 99 years.

"In the board's view such an extension is very important to securing the approval of the restructuring plan by shareholders and banks alike," it said.

The announcement caused some surprise since only last week Eurotunnel said that approval for the rescheduling was not contingent on its concession being extended and appeared to play down its importance.

If the concession is extended then shareholders will receive extra warrants entitling them to subscribe for new shares at 130p. If they were fully exercised then existing shareholders could see their share of the enlarged equity rise to 55.5 per cent, supposing the banks do not convert any of their equity notes into shares, giving them control of Eurotunnel.

Eurotunnel's 750,000 shareholders will not be able to vote on the restructuring, which could see their interest reduced to under 40 per cent, until April next year. The French shareholders group, Adacte, is already urging investors to vote against the deal.

The request to extend the concession came as Eurotunnel announced a management overhaul and formally appointed Kleinwort Benson as its corporate finance advisers in the UK. A team from Kleinwort led by Adrian Montague advised Eurotunnel throughout its negotiations with the steering group of six lenders representing its worldwide syndicate of 225 banks.

The management changes under the group managing director, Georges-Christian Chazot, will see responsibility for Le Shuttle and through rail services divided up. Bill Dix, previously chief commercial officer, becomes managing director of Le Shuttle and James Evans continues as director of rail services.

Alain Bertrand, formerly chief operating officer, becomes managing director, planning and development, with responsibility for "maximising productivity of group assets and personnel".