86 billion of bonds repayable in shares proposed by Eurotunnel

By July 25 Agreement

July 25 at 2: 30 p.m. public hearing, the tribunal de commerce of Paris will announce its decision on the request of Eurotunnel to benefit from the backup procedure Act 2005 Perben. In the meantime, the CEO of Eurotunnel, Jacques Gounon, said and repeated: it is more negotiating with creditors. But he hoped that representatives of junior and subordinated debts take advantage of this long deliberations 13 days to reach an agreement by themselves to to reallocate between 1.86 billion of bonds repayable in shares proposed by Eurotunnel. If what he calls its wishes comes true, the failure of the negotiations on the night of Wednesday to last Thursday no longer then that a bad memory. But it will remain to validate the agreement by the shareholders, the General Assembly which was scheduled on 27 July was cancelled by a unanimous decision of the Board of Directors of Thursday morning.

Observation of disagreement on July 25

If, on that date, Deutsche Bank remained on his last position, prohibiting the signing of a consensual agreement, the tribunal de commerce shall designate one or more administrators to attend Jacques Gounon on debt restructuring. "They can return to the folder in the sense that suits them", warned, and even, if they wish hypothesis is true little likely, start from scratch. In the meantime, the company under backup procedure will continue to live almost normally, ensuring its mission of public service channel with customers and paying employees and suppliers... but not the interests of the creditors.

The deadline of the end of September

Given the inability of current for the company to meet its maturities from January 2007 (beginning of the repayment of the principal of the debt), Jacques Gounon considers that where administrators come to validate a plan of restructuring by the creditors, the agreement should in any way be implemented at the end of 2006 at the latest. Otherwise the mechanical leading to bankruptcy would be launched inevitably. To meet this deadline and incompressible time given, it would be imperative to the restructuring plan to the shareholders at a general meeting at the more later in late September.

Bankruptcy or substitution

Doomsday scenario, the launch by the consular Court of bankruptcy proceedings could theoretically lead Eurotunnel to liquidation. But there is a more likely alternative: the ad hoc Committee of major creditors may, at any time in case of risk of liquidation, trigger the process of substitution, i.e. to take control of the channel tunnel.

Specifically, senior and junior creditors (but not subordinates) ask French and British Governments to substitute for Eurotunnel, the time required for that they repay their debts, but not beyond 2052 (this date was originally that of the end of the first grant of Eurotunnel, when, in 1997, the concession was extended to 2086, the mechanism determining the substitution has not changed at the same time). During the entire period of substitution, shareholders are "frozen" somehow, and subordinate creditors will do no affect, them, before 2032. The management of the company, bankers, new masters of the tunnel, can entrust to the existing teams, or to a new operator.