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Last Updated: Friday, 17 June, 2005, 18:32 GMT 19:32 UK
Eurotunnel chairman wins battle
Eurotunnel train
Eurotunnel needs to come up with a debt restructuring plan
Eurotunnel chairman Jacques Gounon has won the battle to continue to lead the indebted Channel Tunnel operator.

Shareholders at the firm's annual general meeting in Calais voted 98% in favour of Mr Gounon after his rival for the top job publicly conceded defeat.

Former Eurotunnel chief executive Jean-Louis Raymond admitted before the vote that he could not hope to win.

Mr Gounon's victory was all but secure after he earlier gained the backing of key shareholder Nicolas Miguet.

Mr Miguet had previously pledged his support for Mr Raymond, but switched sides at the last minute.

'Unity'

There was however some good news for Mr Raymond, as shareholders re-elected him as a director of the company.

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

He recently stood down from the position of chief executive after a long-running dispute with Mr Gounon over the future of the firm, which is struggling with debts of 6.4bn ($11.5bn; 9.6bn euros).

The company said the result of the votes represented "a great day for Eurotunnel".

"This is unity breaking out at Eurotunnel," added a spokesman.

Mr Gounon now has to return his efforts towards securing the firm's financial future.

He and Mr Raymond have markedly different rescue plans for the business.

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

"We've only got 18 months ahead of us (before facing potential bankruptcy)," Mr Gounon told the meeting.

"We have to mobilize to give the business a future, and I am convinced we will get there."

Debt complications

Mr Gounon says Eurotunnel has until October to secure an outline deal, failing which creditors could step in and take control of the business.

Eurotunnel Jacques Gounon
Jacques Gounon plans to be bullish with creditors

Yet any attempt to persuade creditors to write off debt has been made more difficult by the news that banks have sold a large portion of the Eurotunnel debt to hedge funds.

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."

Eurotunnel has struggled against tough competition from low-cost airlines and the English Channel ferry operators.


BBC NEWS: VIDEO AND AUDIO
Eurotunnel shareholders voice anger at the firm's woes



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