Eurotunnel in debt restructuring talks
Channel Tunnel operator Eurotunnel is battling to seal a deal that would pave the way for a shake-up of its £6.2bn (€8.8bn) debt pile, it emerged today.
The struggling group is trying to conclude an agreement with its creditors that would enable it to proceed to full-blown talks about a financial restructuring.
Eurotunnel hopes to seal the preliminary deal ahead of a meeting of its board on Friday, a report today claimed.
Talks continued during the weekend to overcome a disagreement about the size of advisers’ fees that Eurotunnel is obliged to pay on behalf of its 122 banking creditors, the report said.
A Eurotunnel spokesman confirmed that the company was in talks with its creditors about a preliminary agreement, but declined to say when it expected them to end.
“The talks are ongoing and when they have been concluded, there will be an announcement,” he said.
If the deal is approved, Eurotunnel would be able to start re-negotiating the terms of its debt ahead of changes to its funding arrangements in the next couple of years that could further worsen its finances.
From the start of next year, the company has to start paying all the interest on its debt in cash. At the moment, it has an agreement allowing it to issue convertible bonds for any interest it is unable to pay.
Eurotunnel is also facing the expiry at the end of next year of the minimum usage charge that train operators such as Eurostar pay to run trains through the tunnel, which could cut its income by £30m (€42m) to £40m (€56m).
The company is keen to conclude an agreed restructuring to avoid a possible takeover by its creditors.
However, any eventual renegotiation of the group’s debt is expected to take the form of a debt-for-equity swap that would dilute investors’ existing stakes.
Eurotunnel has launched a project to boost its income and cut costs that includes measures to match supply to demand on its passenger and truck shuttles and to cut the group’s 3,000 workforce.
However, it has warned that those measures alone will be inadequate to safeguard its future beyond the next two years.
Eurotunnel’s new all-French management team drew up the plan after rebel shareholders ousted the previous board at a stormy annual meeting in Paris last April.
