LONDON - Eurotunnel executives are launching a last-ditch attempt to persuade creditors to back a restructuring plan that represents the Anglo-French company's final chance to avoid liquidation.
The company's 53 creditors are voting in Paris today on proposals from Jacques Gounon, the chief executive, to write off half
of Eurotunnel's £6.2 billion ($18.74 billion) of debt.
They have been asked to accept a deal in which their lending would be converted into new loans worth £2.8 billion and convertible bonds worth another £1.27 billion.
Senior management spent the weekend campaigning for a yes vote, saying the Paris Commercial Court has already assessed the company's liquidation value as just £890 million.
The company said yesterday that most creditors would be substantially worse off with a share of an asset pool of that size. It also said it had agreements in place with two backers, a consortium of Goldman Sachs and Deutsche Bank as well as Citigroup, to underwrite the restructuring.
However, it remains unclear whether enough creditors have been persuaded to back the deal, which would enable Eurotunnel to move out of French bankruptcy protection.
The main difficulty is that while the company is confident it has the backing of two large creditors, that may not be enough - even though they hold more than half of the outstanding debt.
The company also has to secure the support of 27 of its 53 creditors at the Paris vote - those failing to attend will be counted as against the deal.
The turnout from "tier three" creditors, who have the most to lose under Eurotunnel's proposals, is particularly uncertain. One such creditor, United States investor Oaktree Capital Management, will not attend as it is mired in a legal dispute about how creditors should be consulted.
Another US creditor, Franklin Mutual Advisers, will not vote in Paris and other American debt holders are also doubtful.
If Eurotunnel is forced into liquidation, it is almost certain the tunnel will remain open, with existing users such as Eurostar continuing services. One option would be for the British and French Governments to take back their stakes and appoint a new operator to run it.
- INDEPENDENT
