Eurotunnel banks may seize control

Channel Tunnel crisis: Lenders examining 'substitution' after rebels oust board of Anglo-French operator

Eurotunnel's banks are weighing up the option of seizing control of the Channel Tunnel following the dramatic ousting of the company's board yesterday by rebel French shareholders.

Banking sources said it would not require an actual act of default - such as the non-payment of interest - to trigger the process. Merely opening talks about renegotiating Eurotunnel's £6.4bn in debts would be sufficient for the banks to move in and substitute the new board that the rebels have nominated.

The sources also suggested that a takeover of Eurotunnel by its banks might be a more acceptable outcome for the British and French governments than allowing the Channel Tunnel to be run by an untested team with mixed backgrounds and little in the way of a coherent business plan.

The removal of Eurotunnel's chief executive Richard Shirrefs, and the rest of the board, was duly carried out yesterday at an emotional and stormy shareholders meeting outside Paris, after the rebels, led by the convicted fraudster and share tipster Nicolas Miguet, succeeded in attracting a majority of the votes cast.

Jacques Maillot, the founder of the leisure group Nouvelles Frontières and the new chairman of Eurotunnel, said his first move would be to renegotiate the company's debts. "We are going to sit around the table with the banking pool and come to an agreement," he added.

However, the banking source said: "I think the lenders must be looking very seriously at the practicalities of substitution in the current environment.

"The bottom line is they had a lot of respect for Shirrefs and the rest of the management because they felt they were dealing with rational people who understood their concerns. All that has now been thrown out of the window. The banks have no idea what the new management has in mind today, tomorrow or in six months and in those circumstances, their natural instinct is to seek control."

The rebels want to bring Eurotunnel into profit by raising charges, forcing the banks to write-off some of their debt and persuading the two governments to renegotiate the Channel Tunnel treaty which forbids direct public subsidies.

In a brief statement, the outgoing Eurotunnel board, which includes the chief executive of Virgin Trains, Chris Green, and the Keith Edelman, the managing director of Arsenal football club, said it considered the rebel plan to be "detrimental to the interests of the company, its shareholders and employees".

Hervé Huas, a former managing director of JP Morgan France, who is the rebels' candidate for finance director, said: "The Treaty of Canterbury is renegotiable. That is the nature of treaties. Both governments have benefited in a variety of ways from the Channel Tunnel. They have earned VAT revenue from the building contracts, they have seen regional development on both sides of the Channel. Productivity in Europe has been boosted by the link. It is in their interests to keep Eurotunnel afloat."

M. Maillot said there was a need for a "modulated tariff structure" for the tunnel although he did not clarify whether this would mean increased charges for Eurostar, the operator of rail services from London to Paris and Brussels, as the rebels have indicated in the past.

A spokesman for Eurostar said it was business as usual, adding: "We cannot see any circumstances in which Eurostar would pay higher access charges and we find it hard to see how this could be in the interests of our passengers."