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LONDON - e chairman of Eurotunnel warned yesterday that the company would be forced into liquidation by the middle of next month, unless shareholders agree to back a debt-for-equity swap to resolve the Channel Tunnel operator's financial crisis.
Jacques Gounon appealed to the company's army of small investors to support the deal when the vote takes place on May 15 - or face a total wipe-out.
His plea came as a 4000-strong group of "foundation" shareholders threatened to take the Anglo-French company to court to protect their travel perks through the tunnel.
Under the restructuring plan, their right to unlimited return journeys for life would be cut to three trips a year at a 30 per cent discount.
The restructuring plan will slash Eurotunnel's debts from £6.2 billion ($17 billion) to £2.8 billion and has already been approved by the company's creditors. But Eurotunnel also needs the support of its 600,000 shareholders for a tender offer to exchange their old shares for new ones.
They will see their stake in the company cut to as little as 13 per cent, but depending on Eurotunnel's success in paying back a £1.3 billion convertible loan note over the next three years, this percentage could rise to as much as 67 per cent.
For the restructuring deal to go through, Eurotunnel has to get the support of 60 per cent of its shareholders. However, virtually all of these are small investors, many of whom have owned their shares for years or decades. In Eurotunnel's 20-year history, the highest ever turnout for a shareholder vote is 45 per cent.
Of the company's 600,000 shareholders, around 80 per cent are French and 20 per cent British. About 100 shareholders own more than one million shares each, but the vast bulk of the remaining shareholders have very small holdings. The average number of shares held is 4000, worth £1120 at Monday's closing price of 29p.
"Some people believe the restructuring deal has already been done, but it has not, Gounon said. "If the tender offer fails, then there is no alternative but bankruptcy. That means Eurotunnel will disappear and, along with it, 100 per cent of shareholders' equity. It is now or never."
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