Eurotunnel seeks shareholder backing over debt plan

Channel Tunnel operator Eurotunnel today required an unprecedented show of support from shareholders in order to stave off administration.

Investors in the UK and France have until the close of trading today to support a debt-for-equity swap which will wipe out much of the company’s £6.2bn (€9bn) debt mountain.

More than 50% of all shareholders have to vote in favour of the deal, or the company will lose the support of the French courts and go into administration.

Eurotunnel has been involved in a PR offensive in an attempt to ensure more than half of its 600,000 retail shareholders participate in the vote. Around 150,000 of them – mostly private shareholders – are in the UK.

They have been asked to vote in favour of a restructuring which will see them swap their shares for a combined 13% stake in a new entity, Groupe Eurotunnel.

The company’s previous best shareholder turnout was around 45% for the appointment of current Eurotunnel chairman Jacques Gounon in 2004.

The result of the vote is unlikely to be known for several days, although Eurotunnel operations will continue as normal whatever the outcome.

Eurotunnel was formed in 1987 to run the Channel Tunnel, but since the tunnel opened in 1994 it has not made enough money from users such as the Eurostar train service to pay off its debts, many of which were run up during construction.

The company has warned throughout the restructuring 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 while it attempts to see through the restructuring.