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Eurotunnel given more time over debt payments

Karen Attwood
27/ 4/2006

Debt-laden Eurotunnel's hopes of survival were given a boost today after its request for further time for talks with its creditors was granted.

The Channel Tunnel operator said it had agreed an extension on the waiver on its debt mountain until July 12.

Eurotunnel has repeatedly warned that without a financial restructuring it would not be able to guarantee the future of the group beyond 2007 - the point at which it is due to start paying back a significant portion of the debt.

Waiver

Last year, the Anglo-French firm was granted a waiver which allowed it to talk to a committee representing a majority of its creditors about restructuring the debt, which is thought to be in the region of '6.7 billion.

Earlier this month, Eurotunnel said a new waiver period would allow for all creditors to come together for the first time to reach a "consensual financial restructuring plan".

The company added that changes at an operational level had resulted in revenues growth of 1% to '541 million in 2005. It also achieved the first improvement in revenues from its shuttle services since 2002 - up 4% to '295 million.

Uncertainty

The figures were issued on a provisional basis as uncertainty over the company's debt mountain forced Eurotunnel to delay its annual figures.

The company has introduced a new tariff structure to match the one-way fares available from low-cost airlines, while it has also asked regular freight customers to provide daily forecasts of their usage - enabling it to plan its capacity better.

A committee of creditors has already rejected a proposal from Eurotunnel to write off two-thirds of the debt without the offer of shares in return.

Creditors could call in the company's debt and take it into their own hands if Eurotunnel is unable to reach agreement with them over its debt.

Eurotunnel faces a number of changes to its finances in the next couple of years that will worsen its predicament - including the repayment of capital on its loans from the beginning of 2007.