Tunnel Vision

Paris, France
June 29, 2007

Investment units in the troubled Eurotunnel company doubled in value at the end of May after a successful share swap operation, before falling again following warnings of untypical trading on the French stock exchange. Had the swap failed, the company would have faced bankruptcy, but now it looks as if the future of the regular cross-channel car shuttles is no longer at stake.

Although the company has always made an operating profit, it has been unable to pay back the construction costs of the tunnel and has struggled with massive debt since the car shuttle service was launched in 1994. The restructuring operation allowed Eurotunnel shareholders to swap their shares for a stake in Eurotunnel SA, and has halved its debts, paying off senior creditors in full.  

The number of small shareholders has been diluted to 13%, holding 2.55bn shares in the new company and a £1.275bn convertible bond will be shared by junior creditors. The British newspaper The Daily Telegraph reported last week that Eurotunnel chief executive and chairman Jacques Gounon has announced plans for the company to raise around 1 billion euro of new capital to repay part of the convertible bond and lift the ordinary shareholders' stake to around 40%.

Best regards,

Maria Savage
International Living's European Consultant