Eurotunnel warns of crisis if talks on £6.3bn debt fail
By Robert Wright in Coquelles
Published: December 14 2005

Eurotunnel's executive chairman warned yesterday that the Channel Tunnel operator could face a crisis if it did not reach agreement with holders of its £6.3bn debt by the end of next month.




Jacques Gounon told the Financial Times the company would not, as had been expected, seek an extension to the waiver agreement that permits the talks to continue, if no deal was in sight when it expired at the end of January.

The company would instead conclude that, if six monthsof negotiations had failed to achieve an agreement, another few months would be unlikelyto produce a deal, Mr Gounon said. That could spur a crisis. "We will see how to manage such a crisis. The company has to decide what to do in the face of such a situation."

However, if a draft agreement had been reached, Eurotunnel would request an extension of the waiver for the time to put the agreement into writing, Mr Gounon said. His comments will be seen as an attempt to put pressure on creditors to agree quickly. The Ad Hoc Creditors' Group said there was no reason to precipitate a crisis in January.

Eurotunnel needs the waiver agreement for restructuring talks because without one any talks would constitute a debt default and allow creditors to seeksubstitution - to take over operation of the tunnel and use the proceeds to pay off the debt.

Mr Gounon declined to elaborate on the form the potential crisis might take and ruled out immediately declaring Eurotunnel insolvent. The company has said it has enough cash to cover its debt and interest payments until January 2007.

Most observers believe it unlikely that even a draft deal can be struck within the set time, but Mr Gounon said he thought it more likely than not that a deal could be reached.
La plûpart des observateurs pensent qu'il est improbable que les grandes lignes d'un accord soient acceptées d'ici la fin du waiver, mais Mr Gounon a dit qu'il pensait que c'était plus probable qu'improbable.