Creditors threaten Eurotunnel revamp

A plan by Jacques Gounon, the chief executive of Eurotunnel, to resurrect the debt-laden transport group, is facing a fresh threat after a number of creditors opted to stay away from a crucial vote in Paris tomorrow.

Creditors are being asked to vote on a complex proposal that will see Eurotunnel create a new company, Groupe Eurotunnel, to acquire the existing business. Debts, currently at £6.18bn, will be slashed and replaced with a £2.84bn loan. Citigroup and a consortium of Goldman Sachs and Deutsche Bank are competing to provide the new finance. Creditors will be guaranteed a 33 per cent stake in the group's equity through a convertible bond.

Mr Gounon has said that the business will go into liquidation if the vote goes against him.

MBIA, the US insurer which is one of the biggest creditors, has backed the plan. But others, such as Oaktree Capital Management, have spoken out against it.

And neither Oaktree nor another US creditor, Franklin Mutual Advisors, will attend the vote, adding to fears that the Channel Tunnel operator will not meet its required quorum.

A binding vote requires 50 per cent of all the creditors to be present at the meeting.

Oaktree, Franklin and other unnamed creditors are staying away on legal advice as they are challenging their inclusion in the creditors' committee.

Oaktree lost a first court hearing on the issue last week, but insiders said they did not expect to win the case until it was referred to the appeal court.

Eurotunnel was already understood to be concerned about reaching the quorum. The vote follows immediately after the Thanksgiving break and many creditors are American. The date was set by a French court.

Mr Gounon placed Euro- tunnel into bankruptcy protection earlier this year after failing to agree a restructuring deal with creditors.