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Last Updated: Friday, 17 June, 2005, 14:55 GMT 15:55 UK
Eurotunnel rivals face key vote
Eurotunnel train
Eurotunnel needs to come up with a debt restructuring plan
Shareholders of troubled Channel Tunnel operator Eurotunnel have arrived in large numbers for the firm's annual general meeting outside Calais.

At what promises to be a turbulent event, they are voting for a new chairman at the heavily-indebted firm.

The two candidates are current chairman Jacques Gounon and former chief executive Jean-Louis Raymond.

Both have different rescue plans. Mr Raymond told the BBC before the meeting that he did not expect to win the vote.

Mr Gounon wants creditors to write off debt without penalising shareholders, while Mr Raymond wants a debt-for-equity swap.

Calais showdown

The firm owes banks a total of 6.4bn ($11.5bn; 9.6bn euros) and the issue for the new chairman will be how best to secure the firm's future.

Each side is, in effect, competing for scraps of value from the Eurotunnel carcass
Jeff Randall, BBC business editor

Mr Raymond, who has proposed a new Anglo-French board, has suggested a debt-for-equity swap, an unusual move in France but one creditors are more likely to be receptive to.

He has the backing of shareholder activist Nicolas Miguet, who was behind last year's replacement of Eurotunnel's board of directors.

Mr Gounon believes the firm's creditors should write off about 4bn-worth of debt without penalising shareholders.

He said Eurotunnel had until October to secure an outline deal, failing which creditors could step in and take control of the business.

Relations between the two candidates have been rocky, with Mr Raymond resigning last week, citing differences with Mr Gounon.

The annual general meeting has begun in Coquelles, near Calais, at 1400 GMT.

Eurotunnel has already received proxy votes on behalf of 40% of investors. But the company has not said which way people have voted.

Hedge funds go in

News that banks have sold a large portion of the Eurotunnel debt to hedge funds could make it more difficult for management to negotiate a deal.

Jean-Louis Raymond has said he does not like Mr Gounon's methods

Hedge funds, which typically take large positions in high-risk investments, are likely to adopt a more hard-nosed approach to any negotiations.

The Financial Times reported on Friday that banks had sold a large portion of 9bn euros-worth of Eurotunnel loans to hedge funds and other investors.

John Hatton of credit rating agency Fitch forecast difficult meetings if current chairman Mr Gounon is re-elected.

"It's just not economically real for [Eurotunnel] to suggest that shareholders should remain unscathed while banks or the debt creditors simply write off their debt," he said.

"It's not normal."

How Eurotunnel got itself into a black hole

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