Eurotunnel auditors warn investors: company is no longer a going concern

Eurotunnel auditors warn investors: company is no longer a going concern

	Published : Sat, 18 Feb 2006 20:05 By : James Rowe Print this Story

LONDON: Debt-ridden cross channel tunnel operator Eurotunnel is inching towards a collapse as its auditors have now resorted to warn investors that it is no longer a going concern. The company has received approval from its creditors to continue seeking restructuring its 6.3-billion-pound debts until the end of March, but it is nowhere near any deal in this regard.

The auditors' warning has come because the major debt repayments are due in 2007 and the company is in no position to meet these repayments because of insufficient cash flow.

Eurotunnel and its creditors have been in negotiations for years together on how to reschedule repayments of the debt, but to no avail.

The company said in a statement that all its senior creditors and 91.32 per cent of its co-financiers had voted giving it time till end of March to continue with the talks. The statement said: "It will allow Eurotunnel to present the financial restructuring framework, agreed by the group and the ad hoc committee on 31 January, 2006, to the other creditors, provided that they sign a confidentiality agreement to preclude them from any trading in the debt or equity of Eurotunnel."

In the absence of a consensual debt restructuring, the company may be forced to "invoke provisions of the credit agreements and the concession", the company said. These provisions could include a standstill agreement or even protection from creditors.

The company, which came into being in 1987 and started operations in 1994, has not been making enough money from the tunnel users to pay off the debts.

Its creditors include U.S.-based Oaktree, Franklin Mutual Advisers LLP and credit insurers MBIA Inc., Ambac and the European Investment Bank.

Eurotunnel's chairman Jacques Gounon had proposed that all but 2.2 billion pounds of the company's debt should be simply written off. He has later intimated a group of creditors that the company could handle closer to 3 billion pounds.