Eurotunnel to stay afloat

Eurotunnel escapes bankruptcy and promises to implement a rescue plan.

     Eurotunnel ran into difficulties when the cost of the construction was much higher than estimated [AFP]

    Jacques Gounon, the Eurotunnel chief executive, expressed his "very, very great satisfaction" with the decision by the court, and said that "Eurotunnel is saved from bankruptcy".
      
    Under the rescue plan, which has been accepted by creditors and must be implemented within 37 months, the company's debt of 9.0bn euros ($11.64bn) is to be halved.
      
    A new company, called Groupe Eurotunnel, will be formed to offer shareholders the opportunity to swap their shares.
      
    "We are going to work extremely hard to implement the new  structure in the quickest possible time," Gounon said.
      
    In a separate statement, the company promised to implement its rescue plan in the first half of this year.

    Troubled beginning

    Eurotunnel, which has been through a number of crises, built up its debt during construction of the tunnel, which ran into cost overruns owing to technical problems and increased safety requirements.
      
    The vast bulk of the company's debt is held by financial institutions, but a large number of small shareholders, mostly in France, bought shares when the company was floated in 1987.
      
    The Paris commercial court, which had granted Eurotunnel protection from its creditors in August, has been supervising the financing of the group.
      
    Gounon said that shareholders will be invited to exchange their shares in the old Eurotunnel to Groupe Eurotunnel, by the beginning of March.
      
    Opposition

    At least 60 per cent of shareholders must accept the offer, but several investors have already expressed misgivings, saying they face a raw deal if the debt refinancing goes through.
      
    Addressing critics of the rescue plan, Gounon said: "All criticism, all contestations, any delay with the implementation of the plan will be very expensive for the company and will therefore be very expensive for them."
      
    He also said that Eurotunnel would publish its accounts for 2005 and 2006, which have been held up because of accounting problems, in the second half of February.

    SOURCE: Agencies


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