Eurotunnel close to collapse
Wednesday, 12 Jul 2006 11:41
Eurotunnel close to collapse
Channel tunnel operator Eurotunnel is desperately trying to avoid bankruptcy as its senior managers negotiate a potential restructuring of the group with its debtors.
The Anglo-French group has until 23:00 BST to secure an agreement with lenders as well as with Goldman Sachs, Macquarie and Barclays, who in May arranged a deal covering half of Eurotunnel's £6.2 billion debt.
"Eurotunnel invited all of its subordinated creditors to a negotiation meeting in Paris at 23:00 on Friday July 7th," the company said in a statement.
"Eurotunnel put new ideas to these creditors, present or represented, designed for their category of debt and compatible with the preliminary financial restructuring plan agreed between the group and its principal creditors."
In line with French laws designed to prevent corporations in trouble from sliding into bankruptcy, Eurotunnel is set to apply for the procedure de sauvegarde, a measure which would give the group additional time to prepare a court-controlled repayment plan before being forced to default on its debt.
Observers believe tensions between the negotiators mean a successful resolution of the talks is unlikely. If no agreement is reached Eurotunnel would be likely to default when the first payment on their debt becomes due in February next year.
Traffic through the Channel tunnel had been expected to revolutionise transport links with mainland Europe since its completion in 1994. Instead the rise of budget airlines and falling passenger numbers since the service was launched has caused operating debts to mount, resulting in Eurotunnel's present crisis.