These hybrid securities in an amount of EUR 1

A new period of uncertainty opens for Eurotunnel. The operator of the channel tunnel has applied to the tribunal de commerce of Paris to benefit from the new backup procedure of firms in difficulty, Act 2005 Perben. He will be able July 25 at 14: 30 pm if consular justice to this motion. This extreme procedure before business cessation of payments is the consequence logical and binding of the failure of negotiations between the leadership of Eurotunnel and its creditors on the restructuring of debt of EUR 9 billion, failed in the night of Wednesday to Thursday last because of the opposition of a portion of the bond led by Deutsche Bank (see below). Another mechanical consequence: the General Assembly scheduled for July 27 to present the restructuring plan to shareholders is set aside.

How has it happened The "ultimate compromise proposal" made by the Directorate did not meet the requirements of the subordinate creditors. In the last hours of bargaining, Eurotunnel had yet everything to avoid the deadlock. The proposed financial package, already signed by the highest priority creditors, had been significantly modified to meet the demands of bondholders such as their association, Arco, had formulated them in a competing plan. The reduction of the debt from $ 9 billion to EUR 3.87 billion, was brought to 57. Debt 512 million mezzanine, initially intended to repay a portion of the subordinate creditors in cash, was removed and replaced by redeemable bonds into shares. These hybrid securities in an amount of EUR 1.86 billion would have allowed lenders to take part in the capital of the group with a minimum of 19 granted irremediably in next five years. But, according to the operator of the channel tunnel, the final sticking point concerned the treatment to the shareholders. Deutsche Bank, Member of the Arco, refused categorically to allow them a place she felt too much (in the worst scenarios for them, they retained 13 of the capital of Eurotunnel). Disappointed by the end of the bar after a year and a half of work, Jacques Gounon, CEO of the group, thus threw the sponge Thursday, stating that his work as a negotiator was now gone and is relying on the justice as it had previously considered it.

A week of reflection

However, this failure is not fatal. The tribunal de commerce of Paris is, indeed, left more than a week of reflection before taking the case in hand, which leaves the door open to an extension of the discussions, nor between Eurotunnel and its creditors, but between them for different share the effort to make. "If the tribunal accords an important time while there is little doubt that the company meets all the criteria allowing the backup plan, it is probably for still leaving room for negotiations," confirmed a close to the record. This window could be the way to "return to reason than" bondholders, as wished by Jacques Gounon.

Subordinate creditors have, indeed, interest to avoid a judicial procedure which would not favour them because, in the framework of a backup plan, the negotiations will resume under the authority of one or more administrators with a Committee of creditors and excluding hedge funds ("hedge funds") and the bond, only consulted. Even though an abandonment of debt may not impose on them, they will therefore not more listened.

Pragmatic, Arco said Thursday his intention to resume negotiations in a constructive spirit (...) ". "to find a consensual solution". After his interview with Jean-Pierre Mattei, spokesman for Arco, Patrick Ollier, Chairman of the Committee for Economic Affairs in the National Assembly, for its part noted a significant shift in the discourse of the bond. Until here "very hijacked", according to him, the latter credo now essentially time.