Eurotunnel debt deal moves closer

Eurotunnel needs a debt deal to continue operating

Eurotunnel has moved a step closer to restructuring its finances after reaching an outline deal with most of its creditors over its huge debt.

The Channel Tunnel operator said it had reached a preliminary binding deal with creditors, thought to hold more than half its £6.2bn ($11.4bn) debt pile.

But it still has to win agreement from other creditors and secure backing from outside investors for new financing.

Eurotunnel's future is in doubt unless it succeeds in revamping its finances.

Step forward

The firm - established in 1987 - has warned that it cannot guarantee its future beyond this year unless it renegotiates its debt satisfactorily.

In an update to investors, Eurotunnel said it had made progress in its protracted debt negotiations, winning approval from creditors thought to hold about £4bn of its debt.

It gave no details of what was contained in the agreement, but stressed that negotiations with financial institutions about a far-reaching corporate refinancing of the business were continuing.

Eurotunnel is talking to a number of potential investors, including a consortium including investment bank Goldman Sachs and Australian company Macquarie.

Shareholder approval

Eurotunnel is to seek legal approval in France to postpone its annual general meeting from 30 June 30 to 12 July.

By then, it hopes to be in a position to ask shareholders to approve the restructuring plan.

The firm has waived negotiations with creditors over its debts - the latest in a series of agreements enabling it to continue talks and to maintain its operations - until that day.

The Anglo-French firm has struggled ever since the tunnel opened in 1994 and last year announced 900 job cuts in an effort to reduce costs.