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Eurotunnel will go bust warns company

Contributed by editor on Jan 22, 2006 - 02:13 PM


EUROTUNNEL WILL GO BUST WARNS COMPANY

Eurotunnel, the Channel Tunnel operator will go bust  in January 2007 if a deal can't be reached with creditors, the company warned last night.

In a report o­n the Guardian Unlimited website today (22 January), a spokesman said: 'A year from now we will have to start paying back a significant part of our debt - at that point, we will be insolvent.'

The company's comments come as Eurotunnel chairman Jacques Gounon is trying to prevent a crisis by negotiating an outline agreement o­n a debt restructuring deal with creditors who are owed £6.4bn.

Gounon is determined to force the banks to forgive debt rather than agree to a restructuring.

Creditors have resisted his demands and are insisting that debts can o­nly be reduced if shareholders give up some or most of their shares in return for a debt write-off of around £4bn.

Eurotunnel makes profits at the operating level, and last year it saw the first increase in revenues from its car and and truck shuttle services since 2002. Original traffic projections for the tunnel however, proved wildly optimistic. The firm is also hurt by massive interest payments.