Tunnel sees light on concession extension

Hopes were rising last night that Eurotunnel will be granted an extension to its Channel Tunnel concession after the company met British and French government officials to press its case for the first time since Labour got back into power, writes Michael Harrison.

Eurotunnel wants its concession lengthened from 65 to 99 years. It has warned that without an extension it will probably not get shareholder support for an pounds 8.7bn debt refinancing at an extraordinary meeting on 10 July.

After yesterday's talks in Paris the UK Department of Transport said: "We will negotiate constructively but we will not be bound by any timetable."

Speaking in Paris before the meeting, Eurotunnel's chairman, Patrick Ponsolle, pledged to do everything in his power to ensure that an "agreement in principle" was in place by 10 July. If the debt restructuring is voted down then Eurotunnel is likely to go into insolvency.

A source close to the negotiations described them as "frank and constructive", adding: "The chances of getting an extension have improved slightly but it is still about even."

The two governments are almost certain to exact a price for extending the concession beyond 2052 - probably in the shape of a share in future revenues.