Troubled Channel tunnel operator Eurotunnel defaulted on a debt payment today, taking advantage of its protection from creditors as it continues negotiations over a restructuring.
The move by Paris-based Eurotunnel to default on a €350,000 interest payment on a tranche of its senior secured bank debt prompted credit rating agency Standard & Poor's to cut the operator's long-term senior debt rating to D from C. The default had been widely expected after Eurotunnel said it would miss further interest payments.
Bondholders are discussing a £6.18 billion debt restructuring under the guidance of a Paris court, which on August 2 granted the company's request for creditor protection.
"Following the initiation of the safeguard procedure, all repayments of debt and interest are frozen until a solution is reached - we just carry on with the negotiations," Eurotunnel spokesman John Keefe said.
The bondholders had failed to reach an agreement over the company's mounting debt over the past 15 months.
The creditors disagreed on the amount of money that shareholders would receive under a restructuring, and over the stake of a hybrid, convertible bond that junior bondholders would receive as part of the restructuring.
#A decision is not expected until September because of the August holiday season in France, people familiar with the situation have said.