Eurotunnel wins vote on debt

Eurotunnel was a step closer to securing its future today after a group of bondholders backed the Channel Tunnel firm's debt-…

Eurotunnel was a step closer to securing its future today after a group of bondholders backed the Channel Tunnel firm's debt-reduction plan.

The restructuring proposals will now be put before the Paris Commercial Court, ahead of a vote by shareholders expected in the spring.

Chairman Jacques Gounon presented a new restructuring plan in October under which current Eurotunnel shareholders will exchange their stock for a combined 13 per cent stake in a new entity, Groupe Eurotunnel.

The company would raise £1.28 billion through an issue of bonds convertible into shares, slashing the total debt by more than half to £2.84 billion.

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The bondholders, who hold 30 per cent of the total debt of Eurotunnel, are the latest group to adopt the scheme, although the process may be subject to legal challenges from individual creditors.

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. Eurotunnel has one million retail shareholders in France, with around 80,000 in the United Kingdom.

PA