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Last Updated: Thursday, 27 October 2005, 09:52 GMT 10:52 UK
Eurotunnel hopeful over debt deal
Eurotunnel train
The company hurtled on the fast-track to debt
Channel tunnel operator Eurotunnel has said it hopes to agree a deal with creditors on its debts before January.

In April, the firm asked its creditors to write off nearly 6bn euros (4.07bn) of debt in a bid to avoid bankruptcy.

"In just a short time we have made encouraging progress," said chairman and chief executive Jacques Gounon.

Eurotunnel did not give any details on the possible deal and did not say if it had discussed a debt-for-equity swap with creditors.

By the end of this year, Eurotunnel will be obliged to start paying all the interest on its debt in cash, which is why the company is keen to renegotiate funding arrangements with its 200 banks as quickly as possible.

Chairman and chief executive Jacques Gounon previously tried to get the banks to simply write off 4bn of the total debt - but the banks flatly refused to do this.

Off the rails

The Anglo-French company was formed in 1987 to run the rail tunnel linking Britain and France.

I'm not overly optimistic nor overly pessimistic
Jacques Gounon

But soon after the tunnel opened in 1994 it emerged that Eurotunnel was not making enough money from tunnel users such as Eurostar to pay off its debts.

Last week, Eurotunnel announced 900 job cuts as it sought to reduce costs.

The company recently reported a 1% rise in third-quarter operating revenues to 140.8m (208m euros; $249m), although revenues slipped at its passenger shuttle division.

Mr Gounon warned earlier this year that bankruptcy was inevitable if the framework of a debt deal had not been agreed by October, although he has since played down this possibility.

"We hope to reach agreement with the ad hoc (creditors') committee before January. I'm not overly optimistic nor overly pessimistic," said Mr Gounon.

Eurotunnel announces 900 job cuts
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How Eurotunnel went so wrong
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