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Last Updated: Friday, 15 December 2006, 06:59 GMT
Eurotunnel passes debt plan vote
Train going into the Channel Tunnel
The Channel Tunnel has proved less busy than was first thought
Bondholders at Eurotunnel have backed the firm's debt restructuring plan, a move that was needed to secure the Channel Tunnel operator's future.

The bondholders have agreed to cut the firm's debt to 2.84bn ($5.6bn) from the current 6.2bn, paving the way for it to leave bankruptcy protection.

Eurotunnel has had problems after it ran up debts building the tunnel.

The vote has proved contentious as some bondholders opposed the plan and others said they may challenge the result.

"Even if today's vote is successful, there are many more hurdles to overcome before the safeguard plan could be executed," said Michael Cox, an analyst at the Royal Bank of Scotland.

"In addition to the various legal challenges, shareholders must also approve the proposal."

Eurotunnel had already won the backing of senior creditors for its plan.

Safe zone

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

The French procedure freezes debt payments and protects companies from bankruptcy - a process similar to Chapter 11 in the U.S.

Had the plan been rejected then the Commercial Court in Paris may have declared Eurotunnel insolvent triggering a sale of its assets.

The court still needs to approve the debt restructuring deal.

Bondholders of Eurotunnel, an Anglo-French company, voted in two groups.

Those representing more than 82% of the debt held by the French company voted in favour of the plan. For the English company, the figure was just over 69%.

Eurotunnel's biggest problem has been that the cost of building the Channel Tunnel was underestimated, while the number of cars and freight expected to travel back and forth was overestimated.




SEE ALSO
Key vote for Eurotunnel debt plan
14 Dec 06 |  Business
Eurotunnel wins debt plan support
27 Nov 06 |  Business
Eurotunnel sends out debt plans
01 Nov 06 |  Business
Eurotunnel unveils new debt deal
26 Oct 06 |  Business
Eurotunnel gets court protection
02 Aug 06 |  Business
Court delays Eurotunnel decision
25 Jul 06 |  Business

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