The “Safeguard” restructuring proposals: simple, balanced and realistic

In accordance with the French “Safeguard” law, the Board of Eurotunnel has today, Thursday 26 October 2006, approved proposals for a draft “Safeguard” restructuring plan, put forward by the company with the support of the representatives nominated by the Paris Commercial Court. Following consultation tomorrow, 27 October, with staff representatives, these proposals will be notified to creditors by the court appointed representatives.

The principal elements of the proposals are:

  1. The creation of a new company, Groupe Eurotunnel, which will launch an Exchange Tender Offer (ETO) to Eurotunnel’s current shareholders. The shareholders will hold a minimum 13% of the equity in Groupe Eurotunnel.
  1. Groupe Eurotunnel will subscribe to a new long term loan of £2.840 billion (less than half of the current debt) from an international banking consortium.
  1. Groupe Eurotunnel will issue £1.275 billion of convertible hybrid notes. The hybrid notes will be convertible over a maximum of three years and one month. Approximately 61.7% of the hybrids are redeemable by the company.
  1. Current Eurotunnel shareholders, who subscribe to the ETO, will hold a minimum of 13% of the equity in Groupe Eurotunnel. They can subscribe directly to the hybrid, up to a value of £60 million (c€ 87.7m) and will benefit from free warrants. The redemption of hybrid notes by the company would allow them to increase their share of the equity from 13% to 67%.

Jacques Gounon, Chairman and Chief Executive said,

“These proposals represent the best possible equilibrium between the demands of the different stakeholders; they retain an exceptional amount of equity and accretion potential for shareholders in comparison to other restructurings. With the debt write off, Groupe Eurotunnel will be able to re-launch from a solid base, and finally develop and grow.”

 

Note to editors:

The creditors will have to vote on the proposals before the end of November. If they vote against the proposals, the company will be placed into administration.

If they vote in favour of the proposals, a Draft Plan will be put forward to the Paris Commercial Court which will issue the Safeguard Plan for the company.

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