Enlarge imageBy Marcel Michelson
PARIS (Reuters) - Anglo-French Channel tunnel operator Eurotunnel was meeting bondholders on Tuesday in an attempt to get them to agree to a debt restructuring plan that Eurotunnel says is key to its survival.
The meeting in Paris was between management and the Close Brothers, the financial adviser to bond holders, including the ARCO group, which has a rival project, a Eurotunnel spokeswoman said.
Chairman Jacques Gounon wants a deal with creditors by midnight on July 12 which he can put before shareholders at a meeting in Calais on July 27.
If not, he plans to file for bankruptcy.
The senior debt holders, called the Ad Hoc committee, are on standby to take action whether the talks succeed or not.
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Three-quarters of the most junior debt holders need to agree in order to keep the Eurotunnel debt deal on track. The company has warned it is ready to dissolve itself unless a deal is reached. Such a move would push holders of subordinated debt way down the line of people hoping to get money out of the company.
Under the Eurotunnel concession, the original creditors can apply to French and British governments to hand the operational licence to them instead of to Eurotunnel. This way they can run the system until 2052 at the latest and get reimbursed.
In theory, Eurotunnel could also ask its creditors for a new time extension, called a waiver, but Gounon has excluded such a move. But some people close to the talks said all participants tried to arrive at a consensual agreement, as soon as possible.
TRAIN SCHEDULE SECURE
Eurotunnel stressed that whatever the outcome of the talks and the future of the company, the uninterrupted running of trains through the tunnel was secured.
Force Ouvriere, one of the staff unions, said Gounon briefed the European Works Council on Monday on the situation and the union said it had a "cold shower" and feared job cuts.
At Tuesday’s meeting, which is likely to last well into Wednesday, representatives owning a majority of 75 percent of the most junior debt need to agree with a debt deal put forward by Eurotunnel. But they are just one group among many, some with higher ranking rights and different voting structures.
Founding creditors, such as the European Investment Bank and the European Coal and Steel Community (ECSC), have a final veto.
The Anglo-French operator said its main creditors, grouped in a committee which represents over 50 percent of Eurotunnel’s debt of about 6.2 billion pounds -- 73 percent of so-called co-financing debt -- have already reached a preliminary restructuring agreement.
This includes a refinancing plan with banks Goldman Sachs, Macquarie Bank and Barclays and AXA Private Equity which would cut the operator’s debt and dilute shareholders’ ownership to 13 percent.
Some of the lower-ranking debt holders, who own about 1.9 billion pounds of the debt, have proposed an alternative plan backed by Deutsche Bank. Eurotunnel met its key bondholders for the first time on Friday.
Eurotunnel took on massive debts due to the soaring costs of digging the Channel Tunnel linking Britain and France.
Delays in the start of train services and lower-than-anticipated traffic exacerbated the problems.
