Eurotunnel showdown averted

A BATTLE for control of Eurotunnel was averted this afternoon when challenger Jean-Louis Raymond handed victory to chairman and chief executive Jacques Gounon at the troubled firm's annual shareholder meeting.

'The chairman has won,' Raymond told the meeting.

The AGM was held against the backdrop of the threat of bankruptcy for the Anglo-French tunnel operator, which is labouring under £6.4bn of debt.

Raymond quit as chief executive last week because of a dispute with Gounon, who then replaced Raymond as chief executive. Raymond subsequently announced, with the support of fellow director Herve Huas, that he would stand for chairman against Gounon.

Gournon's victory became certain after key Eurotunnel shareholder Nicolas Miguet made a surprise U-turn to back him at the meeting. Miguet, who had previously said he would support Raymond, was greeted with cheers when he took the floor of the annual general meeting. He told shareholders he represented 20% of the votes, effectively making him the king-maker.

'What matters is Eurotunnel, not Jean-Louis Raymond,' he told Reuters before the meeting. 'We will manage to make Eurotunnel united.'

Tension ahead of the AGM was fuelled by memories of last year's event, when shareholders voted out the entire board, and by a phoney war over the last few weeks between the company and its banks.

Gounon has said the company needs to reduce its debt by £4bn and has warned that bankruptcy would be inevitable without an outline deal with the banks by October.

Today he told shareholders: 'The time of division is finished. We've only got 18 months ahead of us (before facing potential bankruptcy). We have to mobilize to give the business a future, and I am convinced we will get there.'

Eurotunnel and its creditors are set to sit down together this summer to negotiate how to reduce the company's debts. Gounon says the banks must write the debt off without compensation, while his rival Raymond has advocated a more consensual debt-for-equity swap - a common restructuring procedure in Britain that is almost unheard of in France.

Answering questions from the floor today, Gounon said the board would do what it could to avoid shareholder dilution in the forthcoming restructuring.