Key vote for Eurotunnel debt plan

Eurotunnel has faced a long battle to get its debt plan adopted

Eurotunnel bondholders are to vote on a proposal to cut the Channel Tunnel operator's debt by more than half, a move designed to secure its future.

The plan to reduce the troubled company's debt to £2.84bn ($5.6bn) from the current level of £6.2bn has already secured the backing of other creditors.

If bondholders back the proposal later on Thursday, the firm will be able to exit French bankruptcy protection.

The Anglo-French firm ran up massive debts building the Channel Tunnel.

But since the tunnel opened in 1994, car and freight numbers have failed to meet projections, and the resulting revenue shortfalls meant the debts could not be serviced as expected.

'Realistic and balanced'

For the plan to be approved, bondholders representing at least half of the value of registered bonds must cast votes, and at least two-thirds of them must vote in favour.

Key bondholders Deutsche Bank and the Arco group have already pledged to vote for the plan.

Whatever the result of Thursday's vote, Eurotunnel may face a legal challenge from creditors opposed to the plan, such as Oaktree Capital Management.

If the plan is rejected, the Commercial Court in Paris may be forced to declare Eurotunnel insolvent triggering a sale of its assets, although analysts say such an outcome is unlikely.

Eurotunnel is currently operating under a so-called "safeguard procedure" - the French version of bankruptcy protection - on the direction of the Commercial Court in Paris.

The firm has described its financial restructuring proposal as the "most realistic and balanced plan that can be imagined".