And you thought P&O were in diffuculty!!!

[Unregistered User]

Below is a translated transcript of a piece in one of the French financial papers, that we thought might be of interest to members. We have translated as is, and make no comment

Eurotunnel is struggling to persuade its auditors, KPMG and Mazars & Guerard, to sign off its annual results, in an accounting wrangle that could shatter the company's fragile prospects of continuing as an independent entity. As the auditors have cast doubts over the long-term future of Eurotunnel, as they are are 'nervous about defining Eurotunnel as a going concern. The results were due in the second week of February but a release date has still not been fixed. The auditors apparently want qualifications written into the document regarding whether the company has a viable future.

The company is expected to report losses of £200 million, according to analysts' forecasts, and is in talks with creditors about its 9.5 billion-euro mountain of debt. It revealed last month that sales fell in 2004 by 4 per cent to 789 million euros.


If the auditors do indeed qualify their approval of the accounts, creditors will be able apply to the French courts for an administrative mandataire to be appointed with sweeping powers to control the business.

At issue is Eurotunnel's ability to service its loans beyond the end of this year, when stabilisation agreements lapse and the repayment rate accelerates. Its half-year results in July contained a lengthy note making it clear that its "going concern" status was under review and was dependent on its ability to put in place a refinancing plan.

To the dismay of shareholders, the French-led board has been beset with infighting and has yet to open talks with banks. Before discussions can begin, both sides need to sign a waiver to alleviate a technical default on Eurotunnel's credit covenants. Lenders have been waiting for an approach over this for months. Eight or nine months after they were elected, there's no particular sign of the board moving on the debt process one jot."

The directors were installed in a coup following a shareholder rebellion last April marshalled by a convicted fraudster and one-time presidential candidate, Nicolas Miguet.

Observers believe the board is split between a hardline faction who want to press for a government bail-out and a "realist" group keen to agree a repayment plan with creditors.

A rightwing French MP, Pierre Cardo, quit the board following a strategy row in November. Last month, Eurotunnel replaced its chairman, Jacques Maillot, with a fellow director, Jacques Gounon.

Eurotunnel has been hampered by cut-price competition from airlines and ferry operators including a new cross-Channel operator, SpeedFerries. Revenue from shuttle services through the tunnel dropped 7% last year.

The credit rating agency Standard & Poor's last month cut riskier tranches of Eurotunnel's debt to a junk rating of CCC minus, defined as "vulnerable to non-payment".

Micheil & jacqui

[Paul H]

Oh dear!! Looks like there may only be Seafrance and TEF left in Kent soon.......(I hope not!!) :nervous:

[jamie]

i know another company in BIG trouble!

[John]

Ouch makes my overdraft pale into insignificance!!!
WHo's the other company then?

[Millsy]

And moving the Eurostar terminus to St Pancras isn't going to help one little bit either - a few years down the line.

The only thing that will sort this of course is bankruptcy and administration if politicians on both sides of the channel are brave enough. Otherwise this basketcase company will struggle on in never never land. Whatever happens French small shareholders should, I fear, prepare for the worst

[Jonathan]

I would suggest the other company might well be MG Rover, but I could of course be barking up the wrong tree.

The Eurotunnel situation in fact has far more parallels with MG Rover than with P&O, as here we are looking at the prospect of an entire business going to the wall rather than just one division of a much larger business. Plus, the UK and French governments invested such importance and prestige in the whole tunnel idea, the tunnel is rather hard to get rid of now as it is in place and debts held by Eurotunnel would effectively disappear with Eurotunnel in the event of its demise, all of which reinforces my view that if Eurotunnel goes to the wall there will still be light at the end of the tunnel (please excuse my pun). I imagine the creditors would seize control of the tunnel rather like a house being repossessed by the lender in the event of mortgage payment default, then the assets would be sold to raise capital to satisfy at least in part the monies owed to the creditors ... so someone could pick up a real bargain and run the tunnel without being saddled with its current debt situation. In other words, whether we like it or not the tunnel really is here to stay.

[Paul H]

Originally Posted by Millsy

And moving the Eurostar terminus to St Pancras isn't going to help one little bit either - a few years down the line.

Eurostar are doing well for themselves its Eurotunnel that are in trouble. I think moving to St Pancras will be better as there will be stops at Stratford, Dartford and still Ashford, St Pancras will be easier for people coming down from the north.

[John]

Fill it in!!!

[daveoflondon]

The French Government will probably bail it out somehow, though I wouldn't mind seeing the end of car carrying operations. Eurostar is a good idea and I hope that stays.

[Davis]

Eurostar is a useful city to city service and i would rather use it then fly to Paris or Brussels. However i don't think that moving it to St Pancras is a good idea and makes the rather expensive Waterloo International useless. The Kings Cross isn't a very nice area to greet travellers and isn't where people from the South-East who will use the new trains on the CTRL want to go, the majority wanting to go to the city.