Eurotunnel - oh dear!

[bixy]

Eurotunnel have failed to reach agreement with their bondholders, as of last night's deadline. They would thus have been insolvent today but for the fact that they have applied to the French courts for protection. The outcome of this currently unknown. If they do become bankrupt and cannot pay their employees then presumably the tunnel will be closed. Since we are supposed to be travelling it through it shortly, that prospect is rather worrying.

Patrick

[Cassis]

I hadn't heard that but regardless of the current financial crisis I can't see the Chunnel closing.  I would have thought a worst case scenario is a takeover by the creditors or a sell-off.  Eurotunnel would make money if it weren't for the crippling debt that they can't restructure or write-off.

[andyh4]

Not actaully insolvent today - but shortly - 2 months is being suggested by the BBC

 

http://news.bbc.co.uk/2/hi/business/5175188.stm

 

Summer holidays should be safe and as Cassis says the likelyhood is that the venture will be sold/taken over as a going concern - but at a loss to the creditors

[Alcazar]

Anyone want to bet that tunnel and ferry prices rise as a result?[:@]

Alcazar

[BJSLIV]

One of the likely contenders to take over if Eurotunnel fail, is the group that operate the Birmingham Toll Motorway. They have already demonstrated their ability to maximise revenues, hiking prices twice since it opened. One of their senior managers commented that it was virtually a licence to print money, as there are no price control provisions in their contract.

[Fay]

Financial commentators on the Today prog this morning said it is a very different situation from going bankrupt and that services will not be affected.

It's more like what they do in the US in invoking Chapter 11 and has no effect on trading. I remember Macy's doing this in the late 1980s or early 90s and carrying on totally as normal for years until they got themselves sorted financially.

I wouldn't get on the wrong side of probably very hacked off staff right now, though!

[Wallemi]

Fay is quite right in that its similar to chapter 11.  English and French law prohibits any company form trading if it insolvent - which is why TNU has not signed off the 2005 accounts yet. It effectively buys them more time.

I have received an email from Eurostar today (the tunnels biggest user) to assure us that they will continue to operate as normal, despite TNU problems.

As already mentioned, the tinnel would make money if it wasn't for the debts and it certainly has not come out of the blue - IMO, it's a miracle they survived so long....