Investors back Eurotunnel rescue

EUROTUNNEL chairman Jacques Gounon is making progress in his battle to rally support ahead of the Channel Tunnel operator's make-or-break annual meeting in Calais on 17 June.

Gounon, co-opted in February to replace Jacques Maillot as head of the debt-burdened company, has won the backing of two key representatives of French small investors who dominate the shareholder base.

His success comes despite doubts over Gounon expressed by share tipster Nicolas Miguet, who rallied disgruntled shareholders a year ago and ousted Eurotunnel's previous, British-dominated board.

Gounon desperately needs the support of Eurotunnel's 800,000 small investors to give him the credibility to complete a financial restructuring designed to cut debts from €9bn (£6.03bn). 'We have to cut debts to €3.3bn or the company will go bust in 2007,' he said today.

Colette Neuville, president of the Association de Défense des Actionnaires Minoritaires, said this week she will support Gounon's election to the board. The Association de Défense des Actionnaires d'Eurotunnel, which united with Miguet to oust the previous board, has broken links with Miguet and says it will also back Gounon.

The rallying of investors behind Gounon came after Eurotunnel launched a campaign of open letters seeking support for action taken by the new chairman.

Within weeks of his arrival, Gounon backed Eurotunnel's costcutting drive and kick-started debt restructuring talks with creditors led by HSBC and Calyon.

He said today that creditors have already written off €5bn of debt. He added that the company was capable of repaying €3.3bn over time. He also outlined a timetable for debt restructuring talks designed to save the Tunnel operator.

Gounon said he aimed to reach agreement on a new business plan with creditors by the end of the month, present proposals for debt reduction by mid-July and an outline agreement on debt restructuring by mid-October. Unless a deal is completed by the year end, when present interest waivers expire, the company will face a sharp rise in debt repayments early next year.

Meanwhile, managing director Jean-Louis Raymond has begun talks with French trade unions about cutting up to 800 jobs. The company has already sent redundancy notices to 108 British workers who volunteered for pay-offs. It had been seeking 240 voluntary British redundancies.