May 30: Goldman Sachs and Macquarie may have to fight off Citigroup if they want a role in refinancing Eurotunnel. Goldman and Macquarie spent months working out a structure to help the Channel tunnel rail operator out of its £6bn hole. Yet, when Eurotunnel announced the outline of a plan last week there was no mention of either bank. Now, according to Dow Jones, Citi has put forward an alternative – one which (hard to believe) may not even involve any dilution for existing shareholders. It seems to involve reshuffling the debt, partly with the use of PIKs, but may not involve the injection of any new money (in contrast to the Goldman/Macquarie plan). Deutsche Bank, which with Goldman is the big market-maker in Eurotunnel debt, seems to on board with Citi. Who would have thought Eurotunnel’s management would have got themselves into a position where they had rival banks competing with each other to refinance the company?

The London market has had another of its late afternoon sell-offs. Tonight, the FTSE 100 index is off 2.4 per cent at 5,652 (a drop of 139 points).

At this rate, the 900p in cash which Ferrovial today offered for BAA (up from 810p) may start to look quite attractive. That offer values the airports group at £9.7bn but was immediately rejected by BAA. The UK group’s shares are trading some way below Ferrovial’s offer, at 873p.

Our reporters have spent more than two hours listening to Vodafone today but one fact stands out: Vodafone plans to pay out 60 per cent of earnings in dividends, which works out at about 80 per cent of its cash flow because its stake in Verizon wireless contributes earnings but no dividend. This tells you that, in balance sheet terms at least, Arun Sarin is doing his best to turn the group into a utility. His dividend plans would put the stock on a yield of about 5 per cent, which puts it roughly in the middle of the utility sector. This also gives shareholders an effective veto on Sarin’s acquisition strategy because, to buy anything big, he will probably need a rights issue. Go to for details on his strategy, to find out how it made a £14.9bn pre-tax loss last year or for commentary from Lex. The shares bounced around a bit and were up about 2 per cent at lunchtime. The stock ended the day flat, but in a market which sold off sharply in the afternoon.

Has Sarin done enough to keep his job? Probably. Have your say through our online poll: tell us if you think Sarin’s strategy will work.

In investment banking, all eyes in London are on Goldman Sachs. Hank Paulson is stepping down as chief executive to be George’s Bush’s new Treasury secretary. This is bound to have implications for the bank’s London leadership. If nothing else, it makes the spank from Hank look like it was part of his departure plan: was Paulson clipping the wings of his young turks while he still could?

Another profit warning from Pace Micro has knocked 13 per cent off its share price. The set-top box maker blamed difficulties in completing the development of products aimed at the US market.

We also have strong new business figures from Standard Life.

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