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Last Updated: Wednesday, 7 April, 2004, 16:58 GMT 17:58 UK
Eurotunnel rebels secure victory
Jacques Maillot
Jacques Maillot is now the favourite to take the company forward
Rebel shareholders of Channel Tunnel operator Eurotunnel have secured victory in their campaign to overthrown the company's board.

At the firm's AGM in Paris they won their vote not to renew the board seats of the chairman and chief executive, paving the way for new management.

The rebels, who have lost 90% of their investments since 1997, want new managers to cut the firm's 6.4bn debt.

They also want state help, but the UK and French governments have refused.

I am all for the Anglo-French relationship... God save the Queen
Nicolas Miguet
Jacques Maillot, the former head of French travel group Nouvelles Frontieres has emerged as the most likely candidate to take up the chairmanship of the company.

Eurotunnel ran into financial trouble because rail passenger numbers have fallen far short of optimistic predictions made when the Channel Tunnel was opened 10 years ago.

The company has struggled to pay interest on its massive debts.

Powerful revolt

There were angry scenes at the AGM, where more than 5,000 shareholders made their protest felt.

When outgoing chief executive Richard Shirrefs stepped on to the podium there were boos from around the huge conference hall.

In contrast, the rebel's leader Nicolas Miguet entered amid cheers, with British and French flags in his top pocket.

Later, outside the hall, he called the win "a good anniversary for the entente cordiale" and declared: "God save the Queen."

Eurotunnel's board conceded on Tuesday night that there was strong support for the rebel French shareholder group led by Mr Miguet, a maverick journalist, investor and would-be politician.

Eurotunnel shuttle train
Chances of [the board] staying in power are quite slim
Eurotunnel spokeswoman Mady Chabrier

The company had said the chance of its management resisting calls for its dismissal were "quite slim".

A ballot of proxy votes cast by shareholders who do not wish to attend the meeting in person revealed that opponents of the board have already picked up 20.5% of the overall shareholder vote, with only 8.3% favouring Eurotunnel's management.

The rebels have been angered by the plunge in Eurotunnel's share price, the board's failure to clear the company's debts and the burden of interest payments.

Mr Miguet led the campaign to sack the board and put in the rebels' own candidates, while at the same time calling for an increase in representation for smaller shareholders at the helm of the company.

He earlier told the BBC that he did not propose to run Eurotunnel himself but would bring in a "very good director general" to head the firm.

Speaking from the AGM, he added: "This is a vote of confidence like we have never seen before.

"It is the financial world's equivalent of the fall of the Berlin Wall."

'No strategy'

Rebel shareholders won a court case last December forcing Eurotunnel to let them vote on whether to keep the management they blame for taking the company to the brink of financial collapse.

CHANNEL TUNNEL - KEY DATES
1957 - Channel Tunnel Study Group formed
1973 - Project to build a cross-channel railway tunnel system formally launched
1975 - Scheme abandoned because of fuel crisis
1984 - UK and French governments say they will find private funding for a fixed link
1985 - Invitation to tender issued
1986 - Margaret Thatcher and Francois Mitterrand announce that bid has been selected.
1987 - The Fixed Link Treaty is ratified
1994 - The tunnel opens

Eurotunnel had warned investors that the attempt by Mr Miguet and his colleagues to unseat the board would threaten their entire investment and risks putting the company in the hands of its creditors.

The UK's National Association of Pension Funds (NAPF) has also criticised the rebel shareholders, saying they had failed to demonstrate an understanding of Eurotunnel's business and legal structure.

It said the rebels' proposal to involve the UK and French governments in helping the company's recovery ignored the fact that Eurotunnel's founding treaty barred it from seeking state aid.

Eurotunnel's managers have put forward a plan to salvage its finances, known as the Galaxy plan, which hinges on persuading train operators to cut costs to boost traffic through the tunnel.


Your views:

There is a third management option. Adacte take over, tells the creditors where to go, the creditors bankrupt Eurotunnel and put their own management in place. Then the original shareholders will have seen a 100% drop in share value. I voted to stick with the current board. They were not responsible for the cost underestimates by TML and the governments, nor for the removal of duty free, nor for the refugee camp problem. Yet here we are with an operationally profitable company with a realistic game plan to reduce the debts and expand business. That beats rhetoric and wishful thinking any day.
Thomas Lankester, Farnham, UK

I cannot believe that the French small shareholders can be so naive as to back this shambolic proposal. It is patently clear that the coup leaders have no real understanding of the structure and problems facing Eurotunnel. At a time of discount travel, their idea to increase prices is frankly laughable - it will play directly into the hands of the ferry companies. The reality of course, is that the project should have had Sovereign funding from the outset and the original traffic figures were wildly over optimistic, but we cannot change that now. However, if the tunnel is to continue, perhaps now is the time for the respective Governments to step in, recognising that this will necessitate a restructuring of the articles of the company; but this, surely, would be a small price to pay to save this magnificent feat of civil engineering which has benefited both economies.
Peter, Twickenham, England

The present board are doing all they can. If there are fewer passengers than predicted how can they pay off the debt quicker? A new board will mean a hand-out of shares to the banks to offset the debt. That's not progress for existing shareholders.
Neil Twentyman, Aberdeen, UK

If they don't perform, sack them! They have no compunction about dumping anyone, good or bad performers, so if they fail - they are out. And no golden parachutes!! Let's bring things back to the level. There should be plenty of other companies' directors starting to sweat now.
David Hume, London, England

The rebel shareholders should give the current board the time to bring the company back to a sound running structure. When we invested in the Tunnel at the start we all knew that this project was risky and gambled our stake to this effect. The board are professional men who are driving a company that is here for the long term. Will the rebels compensate if they make the situation more unstable and the shares collapse completely? I do not think so. The current board should stay. The large institutions should register their vote which I am sure would favour the current board and structure, but as a group are known for not voting at important times such as now.
David P Carver, Norwich England

Why not hand over the tunnel itself to the banks and other creditors as full payment for the sums owning to them. Eurotunnel would then rent the use of the tunnel from the new owners. The rental would need to be set at a level that would allow Eurotunnel to be competitive compared with other cross channel operators. The creditors would need to set up or take over the tunnel management committee. The alternative would be for Eurotunnel to go into voluntary bankruptcy that would allow a new company to take over the assets without any of the debt burden.
Dennis de Silva, Vise, Belgium

Eurotunnel have done themselves no favours by maintaining such high travel charges. They have priced themselves out of the market. As a shareholder, I have always chosen Eurotunnel, despite paying over the odds. However, now I have given up and tomorrow I shall be travelling to the UK for Easter by ferry.
Felix Morris, Waterloo, Belgium

I supported the current board. The problem is the massive debts run up during the construction of the tunnel, and the low level of rail traffic. The current board are doing the best they can.
Alan Alvey, Southampton UK

The entertainment provided by the manner in which the new board will run the company should well exceed the 40 that my shareholding is currently worth. Bankruptcy might not be best for the shareholders, but it is the only option for the success of the tunnel.
Andrew Clark, London, UK

I used to work at the tunnel for 10 years as a traction engineer, plus I'm a shareholder. The rebels' option is not really structured, and they do not seen to have a true concept of the debt facing ET or rather how to reduce it. They are largely French shareholders though, and may be able to bring in greater shareholder benefits and protection through the French courts & system. However, the present board have not made the tunnel attractive enough for travellers price-wise, and whilst this is fine were the tunnel working at full capacity, it shows poor judgement with the trains at a low capacity. I would go with the devil we know and stick with the current board.
Martin Worsley, Loughborough, UK.

The rebel is out of me on this one. The shares are virtually worthless. The respective governments use "positive vibes" from the management as an excuse to leave things be. The reality is however it's a link both governments must keep. Take it to the brink and maybe beyond. Let's force the governments of both countries' hand by threatening closure and mothballing. I've written my shares off anyway. Lets have some fun!!
David Sime, Leatherhead, United Kingdom




BBC NEWS: VIDEO AND AUDIO
The BBC's Simon Montague
"They gathered in the French capital to complete a remarkable coup"



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