A letter sent over the weekend from the company's lead bankers to the rest of the 225-strong syndicate provides the clearest indication yet that the shareholders' stake in the tunnel - now 100 per cent - will be slashed as a result of a financial rescue now under way.
Earlier this month, Eurotunnel unilaterally suspended interest for up to 18 months on its pounds 8bn bank debt after it had presented the lead banks with a three-year plan for the years 1996 to 1998 which assumed much lower revenue forecasts than previously.
The banks were told that, under one scenario, if Shuttle revenues turned out to be 10 per cent lower than independent forecasters had predicted the company would not be able to repay total debt and accrued interest until 2052.
A document sent to the banking syndicate by Eurotunnel's four top banks, headed by NatWest, says: "We continue to be of the opinion that any pain must be shared by all stakeholders.
``We question whether it is reasonable to expect the banks to assess the amount of pain that they should take without a clear idea of what contributions [if any] might be expected from other interested parties."
Eurotunnel's major bankers say that they regarded proposals put to them earlier this month by the company to refinance the group "as unbalanced and unacceptable" to the syndicate.
The bankers say that it was the revenue forecast shortfall for the next three years and the company's desire not to allow a refinancing to hit its shareholders that led to the inability of the two sides to reach agreement.
Eurotunnel then decided to suspend interest payments for up to 18 months and has 6 months to come up with proposals for refinancing.
It also emerged from the letter that the European Investment Bank, one of the project's biggest backers, is calling in loan guarantees given to it by other banks in the syndicates.
This will reduce its exposure and load the burden on some of the other banks.
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