Eurotunnel heads towards high-speed rail bid
Written: 30th May, 2008
Eurotunnel is considering a bid for the UK's high-speed rail line linking London St Pancras and the Channel Tunnel after completing a restructuring that has restored the company to financial health.
The Channel Tunnel operator will today reveal it has placed the remaining 31m shares not taken up as part of a €915m (£720m) rights issue with a range of institutions. The placing is thought to have been more than three times oversubscribed.
Some 70pc of existing shareholders took up their rights at €8.75 - a 28pc discount to the share price on 29 April. However, new institutional shareholders which bought into the placing have had to pay €10 per share. Eurotunnel shares fell €1.1 to €10.60 in Paris.
The institutional placing is the final piece in a complex jigsaw that has seen the once-debt-laden Eurotunnel slash its debts from €9.4bn to just over €4bn.
The new cash, allied to March's €800m placing of deferred shares, enables the company to buy back all the redeemable notes held by junior creditors before they convert into new stock, thereby preventing any more dilution of original shareholders.
Chairman Jacques Gounon said: "We have raised more than the €729m we needed to acquire the remaining redeemable notes. We raised more because of the enthusiasm shown by investors."
Total costs of the fundraising were €35m-€40m.
Eurotunnel must buy back the redeemable shares on July 6. Mr Gounon said: "We are now in a crazy situation, given where Eurotunnel was a year ago, of having to find somewhere to invest our cash for a month."
Mr Gounon said he could now devote more time to growing the business, including a bid for the high-speed line when it is put up for sale by government-backed London & Continental Railways.
"Eurotunnel now has a strong balance sheet. We will certainly consider the high-speed line," said Mr Gounon. "We are the only operator that can generate synergies because we have the same customer - Eurostar."
Source Telegraph.co.uk