EUROTUNNEL WILL BE BANKRUPT IN A YEAR — REPORT

CHANNEL Tunnel operator Eurotunnel will be bankrupt in January 2007 if a deal can't be reached with creditors, the company has warned.

According to The Observer newspaper, a Eurotunnel spokesman said: “A year from now we will have to start paying back a significant part of our debt — at that point, we will be insolvent.”

Eurotunnel chairman Jacques Gounon is trying to negotiate a debt restructuring deal with creditors who are owed £6.4bn.

The Observer reported that Gounon had told Eurotunnel's predominantly French investors that he is determined to force the banks to forgive debt rather than agree to a restructuring that could involve a dilution of their shareholdings.


But the creditors have resisted his demands, said The Observer, and are insisting that debts can only be reduced if shareholders give up some or most of their shares in return for a debt write-off of around £4bn.

Original traffic projections for the tunnel proved wildly optimistic. Its finances will deteriorate further in November when rail freight operators will no longer be required to pay minimum usage charges.

SOURCE RAILNEWS