Anglo-French Eurotunnel has just been able to stave of filing for bankruptcy with the narrow approval of a new restructuring plan. Of 53 registered creditors with the lion’s share of Eurotunnel’s debt, 28 voted for the plan, one more than needed. The creditors, who hold 72 percent of the debt, will get 87 percent of a new company, Groupe Eurotunnel, with existing shareholders getting 13 percent.
Boss Jacques Gounon says: “I’d like to thank the creditors and the many shareholders who have backed the plan. We can at last hope for Eurotunnel’s rebirth, and for it to become a normal company”. The deal slashes company debt by more than half from its current nine billion euro plus level, through new loan facilities and a favourable restructuring, with financing support from Goldman Sachs-Deutsche Bank and Citigroup. Only rejection by bondholders can veto the agreement.
Once thought to be a retirement gravy train for investors the Channel Tunnel has gone from a gold-plated investment vehicle to train wreck in the 12 years since it opened. Costs spiralled as forecast passenger numbers failed to materialise, and revenue targets came and went without ever being attained. Debt servicing charges were the final straw and the company first restructured only three years after opening for business. Two years ago shareholders revolted and took over, beginning a process ending in this deal.