Eurotunnel - overpriced at 18p

Looks like ETL can at last move forward. I suspect that the 13% shareholders will get of the new company will be worth a lot more than 100% of the old doomed company. Let's see


Eurotunnel Plc/Sa ROUNDUP Eurotunnel restructuring passes last major obstacle


PARIS (AFX) - Proposals by Eurotunnel SA/Eurotunnel PLC for restructuring
the company's 6.2 bln stg/9.1 bln eur debt mountain passed their last major
obstacle when the plan won support from bondholders representing 30 pct of the
borrowings.
The Channel tunnel operator is on course to implement the project in the
early months of next year, putting the company on a sound financial footing for
the first time, having been constructed entirely without state aid.
The restructuring will likely be completed in the nick of time to avoid the
prospect of bankruptcy next year, when Eurotunnel is scheduled to start repaying
the principal on its debt.
Holders of sterling denominated bonds last night voted 69.22 pct in favour
of the plan, only just above the minimum threshold of two-thirds. The project
was backed by 88 out of 131 eligible participants in that category.
The vote by holders of euro denominated bonds achieved a better margin, as
the proposals received support from 102 of 149 bondholders, representing 82 pct,
a company spokesman said after the ballot was counted last night.
"This vote concludes two years of intense negotiations and gives us a
realistic and balanced plan which preserves the interests of all stakeholders,"
Jacques Gounon, Eurotunnel chairman, said in a statement.
The scheme was approved by Eurotunnel's bank lenders and its suppliers at
meetings on Nov 27. Staff representatives in both France and the UK gave their
backing yesterday morning.
Eurotunnel has received two firm offers, one from Citigroup and another
submitted jointly by Goldman Sachs and Deutsche Bank, to finance the debt
restructuring.
The company's success in pushing through the proposals comes despite
continuing legal action by a few creditors, including US investment fund Oaktree
Capital Management, which is seeking a legal review of the bank lenders' vote.
The scheme must now be signed off by Emmanuel Hess and Laurent Le Guerneve,
the two administrators appointed by the Paris commercial court under the
safeguard procedure adopted by Eurotunnel in August.
The court will convene on Monday.
An earlier version of the restructuring scheme was blocked by the
bondholders in July.
Under the revised restructuring plan published on Oct 26, Eurotunnel will
cut its debt to 4.16 bln eur by buying back all its existing debt and taking a
new loan from an international pool, similar to the initial draft's intention to
cut total debt to 3.3 bln stg.
The company increased the amount of cash it is offering to existing
bondholders to 240 mln stg/352 mln eur from the 100 mln stg that it earmarked in
the first version.
Eurotunnel proposes to issue new bonds worth 1.25 bln stg/1.87 bln eur,
convertible to shares over a maximum of three years, though Eurotunnel would
have the right to buy back 61.7 pct of them if it can afford to do so.
Gounon envisages the launch some time in the first quarter of the share swap
offer through which the French and UK incorporated companies would be merged
into Groupe Eurotunnel.
Existing shareholders could end up with as little as 13 pct in the capital
of the new company, but will retain their discount on cross-Channel travel.
Eurotunnel is targeting acceptance of the share swap from 60 pct of the
800,000 shareholders.
Gounon has said he hopes trade in the company's investment units can resume
towards the end of January after being suspended on the London Stock Exchange
and Euronext Paris since the spring, when Eurotunnel failed to file its 2005
accounts within the time specified by London listing rules.
It could not guarantee it was a viable going concern until the outcome of
the debt talks was known.
Eurotunnel was floated on the Paris stock exchange at the end of 1987 at 35
francs (5.34 eur) and reached a high of 128 ffr (19.51 eur) in May 1989. The
units were trading at 0.44 eur when they were suspended.
The tunnel makes an operating profit but has never earned enough to pay back
the costs of its construction. The best way of reducing that financial burden
has been battled over since April 2004, when shareholders voted out the entire
board in protest at a debt restructuring plan.
New directors initially advocated scrapping the restructuring project in
favour of forcing banks to accept a reduction in their debt and asking the
British and French governments for money.
They quickly changed their minds but had no more success with their own
restructuring ideas and chairman Jacques Maillot resigned in February last year,
to be replaced by Gounon.
He too missed a series of self-imposed deadlines for a deal and finally
applied for the safeguard procedure in July when the first version of his
restructuring plan was blocked by the bondholders.
Use of the tunnel is growing fast, and Eurotunnel's third-quarter sales grew
7 pct as revenues from its shuttle trains jumped 12 pct.
The number of trucks transported on Eurotunnel's freight shuttle service
increased 4 pct, while Eurotunnel's passenger shuttles carried 3 pct more cars,
though coach traffic dropped 11 pct.
Eurostar passenger figures climbed 10 pct, while trains operated by
specialist companies carried 3 pct more freight through the tunnel in the first
quarter compared with a year earlier.
Gounon has said he expects the Channel tunnel operator to post a profit next
year excluding financial charges, though he rules out the prospect of the
company paying a dividend in the new future.