Final Channel tunnel shares issued

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The company that operates the Channel tunnel is to complete its €1.7bn ($2.65bn) capital raising with a placing of €336m of shares to be completed on Thursday.

The shares represent the 30 per cent of rights to new shares in Groupe Eurotunnel not exercised by existing shareholders under the rights issue, launched in April.

The two-day exercise – which started on Wednesday – will see private shareholders lose their status as Eurotunnel’s largest shareholder group. When the company’s complex restructuring, started last year, completes in 2010, they will hold around 36 per cent of the shares, against nearly 100 per cent before the restructuring.

However, the proportion will still be far higher than the 13 per cent that looked likely when the restructuring – needed to combat falling revenues and reduce debt – was first announced.

Jacques Gounon, executive chairman, said existing shareholders’ take-up of 70 per cent of the rights on offer clearly demonstrated strong support for the new Eurotunnel. “The private placement of unsubscribed shares by a banking syndicate of top rate institutions should attract new shareholders seeking long-term investments, for whom Eurotunnel, as an infrastructure owner, will represent real value for the future,” he said.

The complex fundraising exercise was launched to ensure Eurotunnel could buy out a series of convertible debt instruments created during last year’s restructuring before they turned into shares. Eurotunnel’s unexpectedly strong share price performance means that the rights issue and other capital-raising will dilute existing shareholders less than the conversion of the instruments would have done.

During the capital raising’s first stage, in March, Eurotunnel issued €800m in deferred shares to buy out a first set of creditors. Goldman Sachs’ infrastructure fund, which underwrote that issue, took €650m of the shares, meaning it will end up as holder of around 15 per cent of the company in 2010.

At the discounted rights price of €8.75 a share, the rights issue has raised €641m already. Holders of unused rights will be paid the difference between the rights price and the share price – €10.76 in Paris on Wednesday – and the shares sold to institutional investors.

The reduction in Eurotunnel’s debt – from €9.18bn before the restructuring to €5.85bn at the start of this year – and strong traffic on Eurostar passenger trains and Eurotunnel’s car and truck shuttles enabled Eurotunnel to declare its first annual net profit in April this year. The company was founded in 1986 to build and operate the tunnel but struggled because of higher-than-expected building costs and lower-than-expected traffic.

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