Eurotunnel

History

Construction

The tunnel cost around £10bn, over double its original estimate of £4.9bn to build^[1]. Heavily indebted, the company has been struggling with the interest on the £10bn loan that has been taken to construct the tunnel. In order to deal with this, many cuts in services have been introduced with varying success and a third of the staff have been laid off. The construction of the tunnel was completed in 1993. The Eurotunnel was once expected to take nearly all business away from cross-channel ferry companies.

As part of the original deal, Eurotunnel has had to invest in research into another two-storey road tunnel, but for cars only, as the fumes of other vehicles would be too high in volume.

Bankruptcy protection

In April 2004, a dissident shareholder group succeeded in taking control of the board. The chairman, Jacques Gounon, tried to persuade creditors to write off some £4bn of debt, with limited success.^{citation needed}

In July 2006, shareholders voted on a deal which would see half the debt swapped in exchange for 87% of the equity^[2]^[3]. However, this plan failed and, on 2 August 2006 the company was placed into bankruptcy protection by a French court for six months.^[4]

May 2007 bankruptcy aversion and return to profit

In an effort to avert the continued bankruptcy of the Eurotunnel company, shareholders have approved the cut of debts from £6bn to £2.84bn. A new company will be created called Groupe Eurotunnel. Major investors will trade their shares for a stake in the new company. The new Group Eurotunnel will receive a loan of £2.84bn from major investment banks such as Deutsche Bank, Goldman Sachs and Citigroup.^[5].

After the cut on its debts, Eurotunnel was able to announce a small net income of 1 million euros in 2007 for the first time in its existence^[6]. Half-year earnings for 2008 have risen to €26 million (£20.6m)^[7]