The rescue plan of EUROTUNNEL

Cyrielle A.

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The rescue plan of EUROTUNNEL

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Thèmes abordés

étude de cas, offre, acceptation, conditions, annonce, réglementation, immobilier

Lecture
Résumé
Sommaire
Extraits

Résumé du document

Eurotunnel plc (in the UK) and Eurotunnel SA (in France) make up the Eurotunnel Group, founded in August 1986, which manages and operates the Channel Tunnel between the UK and France.
It operates the car shuttle and earns revenue on other trains (freight by EWS and SNCF and passenger service by Eurostar) passing through the tunnel. Unfortunately, passenger numbers are around one-third of the original projections.
Heavily indebted, the company has been struggling with the interest on the £10bn it has taken to construct the tunnel. The tunnel costs nearly 6 times more than expected to build and Eurotunnel's debts are around $11 billion. Its profits can not even match its interest payments. In order to deal with this, many cuts in services have been introduced with varying success and a third of the staff has been laid off.
The Eurotunnel was once expected to take nearly all business away from cross-channel ferry companies, however the increase in passengers has meant there has been enough customers for both.
As part of the original deal, Eurotunnel has had to invest in research of another two-storey road tunnel, but for cars only, as the fumes of lorries would be too much. According to the recent actuality concerning this company, we consider that it is interesting to study how they endeavor to solve the different issues.

Sommaire

Reasons of Eurotunnel's situation
1. Conditions of the project's launch
2. The vices of elaboration
3. The costs skids and the drift's calendar
4. The overvaluation of receipts and disproportionate load of debts
5. The restructuring of 1995-1998
Financial restructuring
1. The legal structure of Eurotunnel
2. EUROTUNNEL and the states
3. The Cantorbery's treaty
4. The concession of public service
5. The inauguration by the heads of state
6. The debts' statement
7. The Eurotunnel's shareholders
8. Eurotunnel and the right of substitution
9. A substitution agreement
10. Answer of the right of substitution
11. Capacity of debt's repayment
Solution to resolve the issue : Historique de la restructuration
1. The plan of the last luck
2. The disappearance of the debt
Negotiation's phase
1. Oppositions of shareholders
2. False information
3. Negotiation strategy
4. Result of negotiation
5. Alternate plans

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Extraits

[...] Not only their shares have no value, but the plan tries to make them add this fresh money thanks to perpetual promises of future profitability. The shareholders brought billion euro of stockholders' equity, during the listing on the Stock Exchange and the capital increases in 1990 and 1994. The contributions in stockholders' equity amount on the whole to 6 billion euro while the current market capitalization is lower than five hundred million euro. Eurotunnel paid billion euro of finance costs and commissions, and payments as regards the debt are widely superior to the outlays of the lenders. [...]

[...] The calculation is made according to the duration of the debt. As far as the capacity of repayment is lower than the par value of the debt, the instruments of debt of the company will be undervaluated. The "theoretical" value of the debt of Eurotunnel in the market was fine 2003 of the billion euro, is of the total value registered on the balance sheet, the theoretical discount being billion euro or of the debt. The elongation of the term(duration) of the financing had allowed to mobilize financial flows taken away to make to buy receivables Since April 7th the value(security) of the debt on the secondary market decreased in a significant way and it seems that in May it reaches(affects) no more than 4 billions The value of the debt until April was indeed established on the acceptance by the direction of Eurotunnel of a philosophy of permanent refinancing having vocation to generate interests till the end of the concession. [...]

[...] Issued for they increase by the bonuses of repurchase. V. Conclusion : analysis The plan proposed by the preliminary agreement of restructuring is translated by the addition of new floors of structure, with the creation of a company which would be listed and which would have vocation manifestly to replace Eurotunnel companies. At first the individual shareholders will be forced to bring their shares to an EXCHANGE OFFER. By waiting for the disappearance of the current listed companies there is in fact an additional complexity of the organization. [...]

[...] The incapacity of receipts to cover the only payments of interest requires. After 3 years of negotiation, a restructuring plan was organized with a blackmail made for the shareholders in the right of substitution. This restructuring was made without reduction of debts and was worsening the financial health of the company. While the disproportionate optimism of the forecasts and the striking incapacity of receipts would have required a reduction at least half of the debt. A structured financing is set up, with half of the debt transformed into appropriate quasi-stockholders' equity. [...]

[...] The slogan of the unprecedented disappearance is thus totally inaccurate, misleading and deceitful. It is in the same way inaccurate to claim that there is substitution of a corporate financing has a financing of project, while it was already about a corporate financing and more exactly about a structured financing. In both cases, in 2006 as in 1998 the reduction of the classic debt is of half, with a sharply insufficient reduction with regard to the situation during the restructuring but presented as justified by the perspectives of development In both plans of restructuring there is creation of said financial instruments " appropriate quasi-stockholders' equity " and intended to use the loyalty and the credulity of the individual shareholders to make them put new stockholders' equity by acquisition of shares created by conversion. [...]

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