Eurotunnel rescue clears vote hurdle

Eurotunnel on Monday took a significant step towards avoiding a looming cash crunch when it narrowly won a vote among the most senior holders of its £6.18bn ($11.96bn) debt for the latest restructuring plan.

The vote was the most important hurdle in the way of the proposed restructuring, which the Channel Tunnel operator presented to shareholders at the end of last month.

However, the company must still win approval from holders of the lowest-ranked £1.9bn of debt, in a vote to be held next week. Some 60 per cent of shareholders will also need to tender their shares before the offer can take effect.

There are also likely to be several legal challenges over the handling of the vote, which was the most significant poll of creditors so far under a new French bankruptcy protection law that came into force in January.

Ken Liang, a managing director at Oaktree Capital Management, the US fund that had led opposition to the restructuring among the creditors polled on Monday, said he believed the vote was only the beginning of the implementation process.

“There are more issues that need to be resolved before the plan can be fully implemented,” he said.

But Jacques Gounon, executive chairman of Eurotunnel, said Monday’s vote showed the plans balanced the needs of creditors and shareholders.

He said: “Eurotunnel’s creditors have approved a realistic and balanced plan which will, at last, allow the company’s performances to be seen in their true context and which will allow Eurotunnel to develop from a solid base.”

At Monday’s meeting in Paris, 28 of the 35 creditors voted in favour of the proposed restructuring, giving a majority of 72 per cent in favour against a required two-thirds majority.

The vote is likely to face a legal challenge from creditors who believe they should not have been forced to join a creditor committee comprising all the £4.28bn of most senior debt. Oaktree and other large holders of the most junior parts of that debt will see much of the value of their holdings wiped out in the restructuring but found themselves outvoted by more senior holders who will be repaid in full.

The vote comes at the end of months of negotiation over the future of the company, which faces a sharp drop in its income from the end of this month and a sharp increase in interest charges and debt repayments over the next year.

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