Eurotunnel in bail-out plea

EUROTUNNEL'S new board has asked for a formal meeting with French Transport Minister Gilles de Robien in a bid to negotiate new financial terms for the embattled group.

After the old board's ousting by shareholders last week, the new management is keen to lobby the French government to come to the aid of the company. It believes it is tightening the screws, saying: 'The government feels the pressure.'

With European elections looming in June and the Finance Minister eager to push ahead with several partial privatisations, the timing for the French government - which has a history of State bail-outs - is poor.

It is in a difficult position as it is looking for renewed public enthusiasm for wider share ownership to help sell a raft of partial privatisations needed to boost depleted public coffers.

New Finance Minister Nicolas Sarkozy said last week the government would sell between 30% and 40% of aero engines maker Snecma in a flotation this summer.

Other partial sell-offs, such as France Telecom, electricity utility EDF and nuclear engineer Areva are being accelerated because the government needs revenues to offset a deficit that busts the 3% cap set for eurozone members. Voters go to the polls in June to select European members of parliament, and political observers believe the centre-right government of Prime Minister Jean-Pierre Raffarin is vulnerable-to another slap-down after a protest vote in recent regional elections. Eurotunnel's 1.1 million aggrieved small French shareholders represent a powerful voting block.

Eurotunnel's new chairman, Jacques Maillot, plans to meet Sarkozy soon to seek government help. Aspiring politicians are also eager to get in on the act. MP Pierre Cardo, part of the Union Movement Populaire centre-right majority and a supporter of last week's putsch, also wants a meeting with the minister to discuss the firm's future.

The new board argues that the Channel Tunnel is a public service and deserves state support. Officials at the finance ministry said there was no question of the government getting involved at the moment, although they admit to watching the situation closely.

The transport ministry says the Canterbury Treaty, signed in 1986 by Margaret Thatcher and French President François Mitterrand, expressly banned State aid and that the government would obey the treaty.

A spokesman for rail operator SNCF said that there was no room for manoeuvre as the company loses money on its activities on the Tunnel, and cannot afford to pay more money to Eurotunnel.