Eurotunnel’s executive chairman warned on Tuesday that the Channel Tunnel operator could face a crisis if it did not reach agreement with holders of its £6.3bn debt by the end of next month.
Jacques Gounon told the Financial Times the company would not, as had been expected, seek an extension to the waiver agreement that permits the talks to continue, if no deal was in sight when it expired at the end of January.
The company would instead conclude that, if six months of negotiations had failed to achieve an agreement, another few months would be unlikely to produce a deal, Mr Gounon said. That could spur a crisis. “We will see how to manage such a crisis The company has to decide what to do in the face of such a situation.”
However, if a draft agreement had been reached, Eurotunnel would request an extension of the waiver for the time necessary to put the agreement into writing, Mr Gounon said.
His comments will be seen as an attempt to put pressure on creditors to reach an agreement quickly. The Ad Hoc Creditors’ Group said there was no reason to precipitate a crisis in January.
Eurotunnel needs the waiver agreement for restructuring talks because without one any talks would constitute a debt default and allow creditors to seek
substitution – to take over operation of the tunnel and use the proceeds to pay off the debt.
Mr Gounon declined to elaborate on the form the potential crisis might take and ruled out immediately declaring Eurotunnel insolvent. The company has said it has enough cash to cover its debt and interest payments until January 2007.
Most observers believe it unlikely that even a draft deal can be struck within the set time, but Mr Gounon said he thought it more likely than not that a deal could be reached by the deadline.
The creditors’ committee said it was in everyone’s interest that any deal reached be a good one, not necessarily a quick one.
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