Big banks refuse to sink Eurotunnel

RUSSELL HOTTEN

The threat of Eurotunnel's smaller banks forcing the company into receivership this week appears to have been averted by the bigger creditors.

The 225 banks, owed pounds 8bn by the Channel Tunnel operator, had a chance to vote on whether to reject the suspension of interest payments imposed by Eurotunnel six months ago.

Attempts by some smaller creditors to muster support against the standstill risked widening divisions among the banks, just as the two Eurotunnel mediators appointed last month begin work.

Eurotunnel's unilateral suspension of junior debt for 18 months, costing the banks more than pounds 1m a day in interest, outraged some smaller creditors.

The banks have until this Thursday to organise a vote against the arrangement, otherwise the standstill will continue for another 12 months. Opponents must raise 65 per cent support, by value of the banks' exposure, if they are to vote down the standstill.

But one banking source said yesterday: "There now seems to be little mood among the majority of banks for any serious challenge. I do not think there will be a vote."

The 35 Japanese banks, thought to be owed up to 25 per cent of the debt, have been among the most strident opponents of the standstill. Yesterday, debt traders said Japanese creditors would continue to be heavy sellers of their debt as their reporting season gathers pace.

Gary Klesch, of Klesch & Co, said debt was trading at around 32p in the pound, though there was little evidence that the big Japanese banks were selling in large quantities.