Fresh selling pressure on Eurotunnel shares

EUROTUNNEL shares came under sharp attack again yesterday on the Paris Bourse in the wake of a debt restructuring plan plummeting 10.2 per cent on hefty volume of 13.8 million shares. On Tuesday, the shares had lost 80 centimes in the wake of presentation on Monday of the plan for restructuring the huge debt to the banks of the Franco British channel tunnel operator. The plan disappointed both financial analysts and small shareholders in the consortium who will be called on early next year to decide whether to ratify the deal.

Analysts note that the banks refused to wipe out part of the company's debt, which is of the order of Ffr70 billion.

With the restructuring plan, the annual debt payment burden will drop from almost six billion francs to 3.2 billion, but the banks will wind up with a big stake in the channel operator, to the stockholders' displeasure.

One analyst said the Eurotunnel shares could fall as low as 1.6 francs under the weight of interest charges. That would open the way for creditor banks to end up owning up to 75 per cent of the company at the end of a seven year survival period, he warned.

The rescue depends on approval from 225 banks, some of which must review their provisions, and from shareholders who are unenthusiastic about the plan. The rescue also depends on a big increase of income from fares to use the tunnel beneath the English Channel from the south of England to the north of France.