THE latest twist in the long-running Channel Tunnel survival saga came yesterday when the Paris Commercial court approved a massive debt reduction plan for Eurotunnel.
Analysts said the legal authorisation paved the way for a fresh start for the company and a share swap for battered equity investors.
It follows a deal late last year when creditors and bondholders of the British-French cross-Channel tunnel opera
tor voted in favour of a plan that will slash debt to £2.84 billion from £6.2bn, following many months of arduous negotiations.
The final milestone in the protracted process is expected to take place in late March, when 60 per cent of shareholders are needed to accept the offer to swap their shares for a combined 13 per cent stake in a new entity, Groupe Eurotunnel.
In the meantime, Eurotunnel will have to publish for the first time its accounts for 2005 and 2006.
Following its long-running stand-off with the banks and the collapse in the share price, Eurotunnel has the overwhelming bulk of its shareholders in France - one million retail shareholders in France, with around 80,000 in the UK.
Eurotunnel has warned that it will go into liquidation if the plan is rejected at any stage of the process.
It is currently operating under French bankruptcy protection laws while it attempts to see through the restructuring.
The company's troubles date back to the project's launch in the late 1980s. The cost of digging the 30-mile tunnel between England and France was underestimated, and traffic has fallen short of initial forecasts ever since it opened in 1994.
In a statement, Eurotunnel said
: "Eurotunnel welcomes with great satisfaction this immediately enforceable decision, which lifts the shackles of its debt, preserves the integrity of the concession and allows it to look to the future with confidence."
