Pipe dream

12 April 2006 By Taron Wade

Eurotunnel is optimistic about sorting things out with its holdout creditors. But afterwards, it still faces shareholder negotiations. Equity investors shouldn’t get their hopes up. If they can hang on to what is already on the table, they’ll have done well.

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Eurotunnel has asked for a third waiver to negotiate with creditors. If agreed, the company will have until July 12, 2006 to reach a consensual restructuring plan.

The company reached a memorandum of understanding with more than 50% of the group's creditors at the end of January. But there are still some junior creditors with which Eurotunnel needs to agree a restructuring.

At the same time the company has extended its reporting deadline. Without a debt restructuring plan it will not be able to guarantee it will be a going concern in 2007.

In 2005, the company implemented a major operational reorganisation, which has allowed revenue to remain stable at £541m, a 4% improvement in shuttle services revenue to £295m and a 4% improvement in operating margin to £299m.

Jacques Gounon, chairman, said, Beyond this positive new dynamism, we cannot guarantee the future of the group in 2007, unless there is a global financial restructuring.

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