Eurotunnel bondholders will present an alternative debt plan to the company in the second half of June as they try to limit their costs in a massive financial restructuring of the indebted cross-Channel rail tunnel operator.
A spokesman for the Arco grouping of Eurotunnel bondholders, who hold so-called junior debt and have not so far directly been involved in restructuring talks, said on Saturday the group welcomed Eurotunnel's recent stance that it was willing to enter into talks after previously presenting its own debt deal as the only possible plan.
"We are working with Deutsche Bank to come up with an alternative which we will present to the company between June 15 and the end of the month," the spokesman said. He denied the group, chaired by former Paris Commercial Court president Jean-Pierre Mattei, was preparing a "putsch" to unsettle Eurotunnel management. Rebel shareholders ousted management in 2004. But there was a threat to current Chairman Jacques Gounon nevertheless.
"If Mr Goujon is willing to entertain our plans he can stay but we have people ready to replace the management," the Arco spokesman said. Eurotunnel on Wednesday unveiled a long-awaited plan to cut its 6.2 billion pounds ($11.56 billion) of debt by 54 percent to around 2.9 billion, by borrowing fresh funds from a group of three international banks.
Barclays Capital, the investment banking arm of Barclays Plc, US investment bank Goldman Sachs Group Inc and the Macquarie European Infrastructure Fund of Australia's Macquarie Bank Ltd are backing the Eurotunnel debt deal. Holders of 1.78 billion pounds of some of the lowest priority would get 100 million pounds in cash plus the hybrid notes in exchange for their current notes and bonds.
The deal means bond holders would have to write off the value of their debt in exchange for a small amount of cash and rights to a convertible bond worth about 1 billion pounds.
Shareholders would be left with about 13 percent of the company they currently own. Bondholders have expressed displeasure. "We have written to Mr Gounon on Friday to tell him that we do not like this plan," the Arco spokesman said. The reaction from shareholders has so far been more muted as they know a bankruptcy could wipe out the value of their shares.
Both groups have to agree to the restructuring package for it to be implemented. There is an annual general meeting on July 12 for shareholders to vote on the deal, while a series of closed-door negotiations between the company and its creditors is expected to get underway soon.
Reuters reported on Tuesday that Citigroup had put forward a financing package, which proposed the issue of 3.5 billion pounds of new debt. Deutsche Bank recently denied newspaper reports it was working with the Goldman team.
The Eurotunnel banks have at one stage contacted French construction and transport concession group Vinci for a role in running the tunnel company but Vinci ended the discussions.
The Arco spokesman declined to comment whether Vinci featured in the bondholders' alternative. Vinci chairman Antoine Zacharias, who was very reluctant to invest in any Eurotunnel restructuring, resigned on Thursday after a power struggle with his chief executive Xavier Huillard.
Vinci named former European Union Monetary Affairs Commissioner Yves Thibault de Silguy, now a senior adviser to utility Suez, as new chairman. Suez said Silguy would stay on until July and that during this period it would ensure a transfer of responsibilities.
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