Success of Groupe Eurotunnel SA’s Warrant Exchange Tender Offer

24/06/2009 - 10:00

Jacques Gounon, Chairman and Chief Executive of Eurotunnel said:

“Despite the less than favourable economic climate, Eurotunnel is putting all its efforts into regaining the levels of operating margin we had before the fire in September 2008. Bringing our customers back and keeping on top of our costs are our priorities. In this context, the success of the exchange tender offer for the Warrants shows what confidence investors have in the strength of Eurotunnel’s business model. The growth of the Group will also be via the development of rail freight: environmental concerns make this a business for the future”.

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  •  Success of Groupe Eurotunnel SA’s Warrants Exchange Tender Offer, with 76% uptake
    • 76% of the 4.3 billion warrants issued in 2007 during Eurotunnel’s financial restructuring have been tendered by a large number of holders who have chosen, two years ahead of schedule to benefit from the business’ return to better days.
    • 103,502,084 new shares will be issued and listed from 27 July, with immediate voting rights. Groupe Eurotunnel SA has the option to buyback 10.4 million of these shares and then to cancel some or all of them in order to bring increased value to shareholders.
    • This advanced conversion enables a simplification of GET SA’s capital structure and gives enhanced visibility to the shares through a higher market capitalisation.
  • The fire in September 2008 continues to affect the Eurotunnel Group’s results, which for the first half of 2009 was a loss of €8 million
  • Traffic and revenues
  • Full Tunnel capacity for Shuttles was restored on 10 February 2009 and Eurostar returned to full service on 23 February, which distorts the comparison with the first half of 2008.
  • Revenues were €266 million for the first half of this year, a fall of 28% at constant exchange rates1, compared to 2008.
  • In contrast to comparable periods in 2008, the number of cars transported by Eurotunnel Shuttles (813,715 during the first half of 2009) was down 18%, a reduction that slowed to -8% during the second quarter. This is similar for Eurostar, with 4,345,576 passengers (-6% compared to the first half of 2008, but only -1% for the second quarter).
  • The consequences of the fire in September 2008 are felt particularly in the transport of trucks: 354,484 trucks were carried on Eurotunnel Shuttles in the first half of 2009, 53% less than in 2008; in this sector, road hauliers make annual agreements with the cross-Channel operators, their return to Eurotunnel is therefore deferred until contracts are renewed. 
  • Since the fire in September 2008, the Eurotunnel Group has received €141 million from its insurers
  • The costs of reconstruction in interval 6 of the Tunnel (€57 million) are covered by the insurers.
  • Studies relating to compensation for the destroyed Shuttle are being completed.
  • An advance of €36 million has been accounted for in the first half of 2009 corresponding to insurance indemnities received during the period to cover operating losses (the last receipt was on 8 June 2009). 
     
  • Excluding insurance costs, Eurotunnel’s external costs were reduced by €5 million in the first half of 2009. The Group has launched a series of projects and initiatives to reduce operating expenditure.
  • At €93 million, Eurotunnel’s gross cost of servicing debt was €45 million lower during the first quarter of 2009, mainly due to the levels of inflation in the UK and France.
  • On 30 June 2009, Eurotunnel had cash reserves of €257 million (after half-yearly payment of interest on the Term Loan).
  • The consolidated net result for the first half of 2009 is a loss of €8 million, compared to a net profit of €22 million (recalculated) for the first half of 2008.
  • Groupe Eurotunnel to bid for Veolia Cargo’s rail freight businesses in France
    • Groupe Eurotunnel has always had the ambition to develop in the rail freight sector. The Europorte 2 subsidiary was the first private entity to obtain a railway operator’s licence (in February 2004) and has demonstrated its expertise in this field (ground operations for 2,718 goods trains and the traction of 847 trains through the Channel Tunnel in 2008).
    • Groupe Eurotunnel is bidding to purchase the French subsidiaries of Veolia Cargo (Veolia Cargo France, CFTA Cargo, Veolia Cargo Link and Socorail) activities which produced revenues of approximately €50 million in 2008. This project is being run in conjunction with a subsidiary of the SNCF group, which is bidding for the German, Dutch and Italian subsidiaries of Veolia Cargo.
    • This transaction will be the first external growth project carried out by Groupe Eurotunnel, and it has been made possible by the 2007 financial restructuring. It will bring forward the development of one of Eurotunnel’s core businesses and at the same time contribute to the preservation of our environment.
       

Appendix 1: Tables showing traffic and turnover for the first half of 2009.

Appendix 2: Financial analysis and important events.

To facilitate comparison, the 2008 first half results have been recalculated at the average exchange rate for the first half of 2009, £1=€1.128

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