| CATEGORY: NEWS AND ANNOUNCEMENTS SECTOR: INDUSTRIAL TRANSPORTATION |
Eurotunnel debt plans get cool response |
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Tue 26 Apr 2005
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LONDON (SHARECAST) - Plans for debt-laden channel tunnel operator Eurotunnel to restructure its £6.4bn debts were dealt a blow today as a committee of creditors dismissed as unrealistic the idea that half of its borrowings could be wiped out.
"Eurotunnel's suggestion will not be acceptable to the majority of debt holders, whose support is necessary for any capital restructuring," a spokesman for the creditors told reporters.
Chairman Jacques Gounon revealed that the company wanted to leave at most €4bn on its balance sheet with results for 2004 showing another huge loss as no-frills airlines and ferry groups upped the pressure. Current debts total over €9bn.
Net losses fell to £570m in 2004 compared with a £1.33bn loss in 2003, on sales down 4% at £555m. Operating profit was £171m versus £170m in 2003, while net interest payments fell to £298m from £318m.
Eurotunnel said the figures were "disappointing", especially the decline in shuttle revenues. Shuttle Services revenue decreased by 7% to £285m due largely to intense competition in the truck market and a further decline in the passenger market. The company says it responded too slowly to changes in the cross-Channel market.
Gounon added that if the debt position is not drastically improved, “Eurotunnel will not make it through the first quarter of 2007."
The company has already started talks over a debt for equity swap to turn £570m of debt into equity and increase the number of Eurotunnel shares by 15%.
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