Eurotunnel surges on bank deal

SHARES in Eurotunnel put on a fresh spurt yesterday as the company confirmed it had obtained the support of its banks to raise a further pounds 1bn.

The shares have now risen by a sixth since Eurotunnel announced a week ago that it had been granted a 10-year extension to its concession to operate the Channel tunnel. Yesterday they closed 20p higher at 630p.

The approval of Eurotunnel's leading syndicate banks paves the way for it to launch a pounds 500m rights issue this spring to meet the escalating costs of the tunnel, now put at pounds 10bn.

The rights issue is expected to take place some time in March or April. The tunnel opens officially on 6 May.

The banks themselves are to put up a further pounds 500m in loans. Eurotunnel had been due to obtain the approval of its worldwide banking syndicate for the refinancing by 30 November, but it was forced to put the deadline back by five weeks while negotiations continued.

The breakthrough came last week when Eurotunnel agreed to drop a pounds 1bn-plus compensation claim against the British and French governments in return for being allowed to operate the tunnel until 2052.

It subsequently emerged that some members of the syndicate were threatening not to provide further loans unless Eurotunnel's concession was extended, thereby making the tunnel a more attractive proposition for its bankers and shareholders.