Shares in Eurotunnel were suspended in Paris on Monday as the group confirmed it was in talks with Macquarie and Goldman Sachs about a restructuring that would involve the two investment banks.

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Investment banks in talks to cut Eurotunnel debt

The Guardian: May 16, 2006
David Teather

Eurotunnel hopes to put a deal in place by the end of this week to sharply reduce its debts and ward off the threat of bankruptcy, it said yesterday.

The operator of the Channel Tunnel rail link has brought the US investment bank Goldman Sachs and Australian firm Macquarie into its discussions as potential investors, as it seeks a means of restructuring its £6.3bn of debts.

Eurotunnel's situation has become more urgent as it faces repayment on what it will only describe as a substantial chunk of capital next year, as well as its ongoing interest repayments. The business is still labouring under the cost of digging the tunnel link between England and France, which was hugely underestimated.

"It is very complicated," said spokesman John Keefe. "There are a large number of different parties and keeping them all happy and achieving value for everyone is very difficult. But we are very hopeful. We have set out our intention to reach an agreement by mid-May and we hope to have something in the coming days."

There have also been discussions with the French construction and transport company Vinci about some form of involvement with the restructuring, to head off nationalist concerns in Paris about the rail business ending up in American and Australian hands. Goldman and Macquarie are expected to take on debt that will over time convert into shares.

A source close to some of the creditors said there was a willingness to get a deal done, but an agreement had not yet been reached. Eurotunnel previously said a sustainable level of debt would be nearer to £2.2bn, but more recently admitted it could probably shoulder a little more.

Eurotunnel hopes to achieve a "consensual agreement" with everyone down to small shareholders getting something back. Its shares, suspended in London two weeks ago, were frozen in Paris yesterday.

Mr Keefe said that Goldman and Macquarie had been invited to the table around 10 days ago after it became clear that some long-suffering creditors were looking for a cash exit. Shares in Macquarie were also suspended in Sydney, pending a "significant announcement".