Shareholder threat to Tunnel refinancing
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Your support makes all the difference.Eurotunnel is facing a cliffhanger of a vote to get its financial restructuring proposals approved by shareholders next month and avoid the threat of being put into insolvency, writes Michael Harrison.
French investor groups representing disgruntled Eurotunnel shareholders believe they are now close to gathering enough support to vote down the refinancing at a crucial extraordinary meeting on 10 July.
The groups estimate they will need around 57 million votes to block the restructuring, under which the banks will swap pounds 2bn of their pounds 8.7bn in debt for a stake of up to 61 per cent in Eurotunnel. Under certain circumstances, the banks could emerge with 75 per cent of the equity.
One of the shareholder groups is led by Sophie L'Helias, who says she has the support of 40 million votes for her demand that the banks cancel 25 per cent of their debt and allow Eurotunnel to issue a new category of shares to existing shareholders to improve their lot. The other two groups - Adacte and the Association of Eurotunnel Shareholders - claim to speak for about 20 million votes.
Privately Eurotunnel executives are pleased that the three groups are collecting proxies because one of the biggest challenges will be to get a quorum at the meeting - 25 per cent of shareholders need to be represented for it to go ahead.
They believe that if Eurotunnel can wring an extension to its concession out of the British and French governments this will be enough to swing support behind the refinancing.
Eurotunnel has warned that if shareholders vote down the plan it will probably have to file for bankruptcy although the shareholder groups contest this. Its 174-strong banking syndicate, which also needs to approve the refinancing, would probably press for the right to substitute Eurotunnel with new management rather than see it pass into the control of a French bankruptcy court.
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