Eurotunnel creditors back debt plan
Debt-laden Eurotunnel moved a step closer to financial security today when major creditors approved a restructuring plan at a crucial vote in Paris.
The Channel Tunnel operator said creditors holding 72% of its senior debt - roughly two-thirds of the total £6.2bn (€9.1bn) owed - approved the plan.
The rest of Eurotunnel's creditors still have to give their backing but the company said today's vote was "a very important step forward in the restructuring process".
Eurotunnel has warned that it will go into liquidation if the plan is rejected at any stage of the process. It is currently operating under French bankruptcy protection laws as it struggles to stay afloat.
The company's troubles date back to the project's launch in the late 1980s. The cost of digging the 30-mile tunnel between England and France was underestimated, and traffic has fallen short of initial forecasts ever since it opened in 1994.
A French court placed Eurotunnel under bankruptcy protection in August after small bondholders rejected a restructuring plan earlier in the year.
Chairman Jacques Gounon presented a new restructuring plan last month under which current Eurotunnel shareholders will exchange their stock for a combined 13% stake in a new entity, Groupe Eurotunnel.
The company would raise £1.28bn (€1.88bn) through an issue of bonds convertible into shares, slashing the total debt by more than half to £2.84bn (€4.1bn) pounds.
Yesterday Eurotunnel said it had received two binding proposals, from Citigroup and from Goldman Sachs and Deutsche Bank, to finance the plan.
Eurotunnel shares have been suspended since April in London and since May in Paris.
The ballot will be followed by a vote of suppliers and a vote by bondholders before the middle of December.
Mr Gounon said: "The results of the ballot demonstrates that the proposed plan is the best balance possible between shareholders and creditors and that it was not possible to ask the creditors, who have already agreed to reduce Eurotunnel's debt by more than half, to go any further.
"Eurotunnel's creditors have approved a realistic and balanced plan which will, at last, allow the company's performances to be seen in their true context and which will permit Eurotunnel to develop from a solid base."
