Eurotunnel has signed a preliminary agreement to restructure its 6.2 billion pound ($11.66 billion) debt pile, and plans to postpone its annual general meeting.
The Anglo-French Channel tunnel operator said in a statement on Wednesday it signed the deal with a committee of senior creditors who hold about 73 percent of the firm's former bank debt and would continue talks with other lenders, including the company's bondholders.
The company, whose debt load has threatened its survival, added it would continue to explore with international financial institutions the best ways to put in place a new corporate financing deal for the group.
But Eurotunnel has not revealed its plans to bondholders or shareholders, and either group can potentially veto a deal.
"No information has been made available to the bondholders for the moment," said a spokesman for the Eurotunnel Bondholders Association (ARCO), a group holding about 1.9 billion pounds of Eurotunnel debt.
The spokesman said the bondholders, mainly European institutional investors, had still not seen a memorandum of understanding signed in January with the senior creditors, or the new agreement announced on Wednesday.
The problems of Eurotunnel, which was founded in 1986, stem from the soaring costs of digging the tunnel linking Britain and France and subsequent delays in the start of train services.
Eurotunnel had no comment on exactly what is in the agreement, but said it showed it was making progress.
"A preliminary binding agreement on the financial restructuring of the group has been agreed with the Ad Hoc Committee. And that's important because now things are starting to really slot in place," a Eurotunnel spokesman said.
French construction and transport concessions group Vinci meanwhile said on Wednesday that it had withdrawn from talks with Goldman Sachs and Macquarie about possibly running Eurotunnel after a refinancing.
The two investment banks have been working on a deal to restructure most of the outstanding debt, and are believed to have approached other banks to join their consortium.
Eurotunnel's British and French shares are currently suspended. When the tunnel opened in 1994, the shares were above 400 pence in London, but their value has withered in the face of the debt problems and it now has the status of a penny stock.
"Only a global restructuring that takes into consideration the rights of the bondholders and which assures at the same time the survival of the company is reasonable," the ARCO spokesman said.
Private shareholder Nicolas Miguet, who holds around 6 million Eurotunnel shares and led a shareholder revolt in 2004 that toppled the company's then management team, welcomed news of a preliminary deal but was in the dark as to its detail.
Eurotunnel said it would seek approval from the French commercial court to postpone its annual general meeting to July 12 from June 30.
Goldman and Macquarie have proposed a deal which involves issuing a one billion pound convertible bond, and lending a further 350 million pounds of equity-like debt called mezzanine finance, according to sources familiar with the situation.
It would also see up to 1.8 billion pounds of new money raised to refinance the most secure portion of Eurotunnel's debt, provided by a group of international banks.
The fresh finance would go on the balance sheet of a new operating company set up to mirror Eurotunnel's role as a tunnel operator with steady cash flows, as opposed to its current project-finance structure dating from when the tunnel was built.
Eurotunnel has a complex debt structure with up to 100 different creditors, mainly broken up into two key groups.
The Ad Hoc Committee comprises the European Investment Bank , Franklin Mutual Advisers LLC, Ambac, MBIA Inc and Oaktree Capital Management. It is advised by Rothschild.
The second group of much more junior and less secure creditors, who formed ARCO, is advised by Close Brothers.
Comments
Comments are closed.