It will also pursue a new loan of an amount of EUR 4

Eurotunnel has made public yesterday its proposals to restructure its massive debt of EUR 9 billion. Furthering the backup procedure under which the company since August 2 is placed, these proposals are its last. "There will be more no negotiations with it", said Jacques Gounon, the CEO of the operator of the channel tunnel. So, the proposals approved yesterday by the Board of Directors are meant to, according to him, "simple, balanced and realistic": they improve the fate of the shareholders and bondholders, which some had strongly disputed the proposals made in the recent negotiations.

The idea remains the same: it is to reduce the debt to a sustainable level for the company. For this purpose, the leader proposes the creation of a new structure, Eurotunnel group, which will launch a public exchange offer (CFS) on securities held by the current shareholders. It will also pursue a new loan of an amount of EUR 4.16 billion over 40 years, negotiating with two pools banking competition, Goldman Sachs and Deutsche Bank, Citigroup on the other hand.

"Corresponds to 54 debt reduction." It is historic. "It never was debt erasure in previous restructuring", said the President. This new debt will place on Eurotunnel a load of interest around EUR 150 million per year, or a 2.5 times less than current. "The business problem can serve this debt", assured Jacques Gounon.

Grant and contribution

If this formula to ensure the full refinancing of the senior creditors, Tier-1 and Tier-2 (with total $ 3.8 billion euros), it posed a major effort on the Tier-3 holders and bondholders (5.4 billion). In return for this concession, they will receive EUR 352 million of cash and will be able to subscribe to a bond of EUR 1.87 billion, repayable in shares (ORA) over a period of 3 years. Eurotunnel, which table on a quick recovery of profitability once the restructuring is completed, nevertheless reserves the right to redeem in the interval up to 62 of the ORA. To do this, it provides either réendetter to EUR 330 million at the maximum height, or to increase the capital. On this occasion, ORA holders will receive a bonus of 40 refund.

For shareholders, proposals are also improved, even if holding 100 of the capital of the new group Eurotunnel initially, they could see their share decrease up to 13 for all ORA conversion. Nevertheless, "Has never seen the shareholders retain as much, in a restructuring", says Jacques Gounon. First, their share could go up to 67 in the case of purchase of the ORA. Moreover, they will be able to subscribe to a small slice of the ORA (while reducing the share available to creditors) of EUR 88 million and receive stock bills, including the free allocation will be linked to business performance criteria. The accession of the shareholders is critical to the success of the plan, even if they are not called upon to vote on the proposals of the company. A turnout of 60 would guarantee the success of the operation according to the Directorate.

A month to decide

But previously, the creditors will have to decide, in a month on these proposals. The two-thirds majority is required to obtain the endorsement of the Committee of creditors, bringing together both the junior and senior, while bondholders will be only consulted. If approved, the proposals will become a draft plan which will be presented in the wake for the tribunal de commerce. Validated by the latter, it will become the backup plan for the concessionaire to the channel tunnel. Not support on the other hand, the company will be placed into receivership, and will run the risk of liquidation. Yesterday, the ad hoc Committee (composed of creditors) senior members have indicated that they would study the proposals and decide later. A few days ago, the junior creditors Oaktree announced that he did not approve this plan, shrinking the conditions made the holder of the Tier-3 debt to the previous plan.