Eurotunnel crisis as rebel French investors oust board

The future of the Channel Tunnel was thrown into doubt last night after rebel French shareholders sensationally succeeded in ousting the board of Eurotunnel, its operating company.

The future of the Channel Tunnel was thrown into doubt last night after rebel French shareholders sensationally succeeded in ousting the board of Eurotunnel, its operating company.

Eurotunnel said the rebel group, led by the former French share tipster and convicted fraudster Nicholas Miguet, had secured more than half of the votes to be cast today on a motion demanding the dismissal of the board and its replacement by a slate of exclusively French nationals.

The outcome, which Eurotunnel had warned was possible but dared not believe would actually happen, will be ratified this afternoon at what promises to be a stormy and emotional shareholders' meeting outside Paris.

Mr Miguet and his Adacte shareholders action group, many of whom have bought into Eurotunnel in the past 12 months with the express intention of removing the board, plan to demand a huge cut in the £6.4bn of debt owed to its banks, double charges to rail users and call on the British and French governments for financial support.

Eurotunnel has repeatedly warned that in the event the rebels won, the banks would take control of the tunnel, rendering Eurotunnel shares worthless. By last night they had secured about 60 per cent of the 1.008 billion votes cast. This represents 20.5 per cent of all the Eurotunnel shares in circulation. By contrast, the management had the support of just 8.3 per cent of the total share capital.

The Eurotunnel board was always vulnerable because 60 per cent of the company is in the hands of one million private French investors. UK investors own just 5 per cent of the company. The results of the proxy votes already cast were not released until after the financial markets in London and Paris had closed last night. When they open this morning, shares in the Anglo-French company are almost certain to plunge.

The proxy votes already cast account for 39 per cent of all the Eurotunnel shares in circulation. Mr Miguet and his allies have won the day with the aid of the backing of about 25,000 private investors who each own 20,000 or more shares. By contrast, those shareholders voting for the board had average shareholdings of just 4,000 shares.

The likely ousting of the Eurotunnel chief executive Richard Shirrefs and the rest of the board represents the gravest crisis for the debt-laden and loss-making Channel Tunnel in the 10 years since it opened. Eurotunnel has never made a profit and last year it lost a colossal £1.3bn after a write-down in the value of the tunnel itself to reflect lower-than-expected traffic revenues.

The upheaval also effectively wrecks a rival restructuring plan which Eurotunnel and its investment banks have been working on with the support of the British and French governments. This envisaged a halving in tunnel charges to stimulate more traffic and a merger with the rail operator Eurostar and London and Continental Railways, which is building the Channel Tunnel high-speed link from Folkestone to London.

The rebels have proposed Jacques Maillot, the founder of the French tour group Nouvelles Frontieres, as non-executive chairman and Jean-Louis Raymond, a former director of the Belgian retailer GIB, as chief executive. Other proposed board members include Hervé Huas, a former board member of JP Morgan Europe, who would become finance director.

In a desperate last-minute attempt to win round shareholder support, Eurotunnel said its current chairman Charles Mackay would be replaced later this year by the Frenchman Philippe Bourguignon, the former chief executive of EuroDisney and Club Med.