Australian bank in Eurotunnel rescue bid

The Eurotunnel linking Britain to mainland Europe is close to bankruptcy. Picture / Reuters

Australian banking giant Macquarie and Goldman Sachs are tipped to take control of the Eurotunnel in a plan to reduce its £6.18 billion ($18.6 billion) debt, European media has reported.

The banks are close to reaching a £1 billion ($3 billion) agreement in which they would pay off creditors and take a majority stake, French and British newspapers said at the weekend.

Macquarie Bank hit headlines in Britain this year when it tried to take over the London Stock Exchange.

Although that bid failed, Macquarie remains in the hunt for international investments.

In the past year the bank has raised about A$6 billion ($7.3 billion) in new equity, about two-thirds of it from international investors.

Macquarie's airport fund has bought a majority holding in Copenhagen Airport and its infrastructure fund is building major toll roads in the United States and France.

A third party, Vinci of France, may also be involved, unidentified sources said.

Eurotunnel is seeking to avoid bankruptcy and has delayed approval of its 2005 earnings until after mid-May. The company may announce restructuring plans next week, it said.

Vinci SA, the world's biggest construction company, said it had been asked to advise a group of financiers preparing to invest in Eurotunnel SA to help manage the underground railway. The French builder has yet to make a decision on whether to take up the role, said Karima Ouadia, a spokeswoman for Vinci.

She declined to identify the financiers or say whether Vinci, which helped to build the tunnel, is studying the proposal.

Eurotunnel, seeking to avoid a second brush with bankruptcy, a month ago asked creditors for more time to negotiate a cut in its debt.

Goldman Sachs and Macquarie Bank approached Vinci about taking part in an investment of about € 1 billion ($1.3 billion) in securities to be converted into Eurotunnel stock, the French newspaper Les Echos said, without saying where it got the information.

Eurotunnel's struggles began 20 years ago when British Prime Minister Margaret Thatcher insisted the tunnel be funded by private investors.

The tunnel, first proposed by a French engineer in 1802, was also hurt by overly optimistic forecasts for revenue.

Vinci was part of the TransManche Link group that built the tunnel. A dispute between TransManche and operator Eurotunnel ensued in the early 1990s amid some $2 billion in cost overruns in what was Europe's biggest infrastructure project.

- REUTERS, STAFF REPORTER