Eurotunnel's woes have shown no sign of abating even as it is clear that a shareholder meeting set for Friday is going to be a stormy one. Chairman Jacques Gounon has admitted that the company is on the verge of bankruptcy and will sink unless a deal is reached with creditors to write off most of its £6.4bn debt.
The company is now dependant on the goodwill of banks. It hopes that the banks will agree to write off half of its outstanding debts. Asked if a refusal from the banks means the end of the road for the company, Mr. Gounon replied, "I'm afraid, yes, it will be." The Channel Tunnel which was opened amid much excitement in May 1994 has been doomed fro the start itself.
At the time of it's opening, the tunnel was a year behind schedule and already in arrears of close to £2bn. Since then, disaster has dogged its every step. David Freud of Warburg, the investment house that sold Eurotunnel shares to the public, says, "We were predicting that on Eurostar there would be 21 million passengers (annually)."
But the figures were way off the charts, as even a third of the passengers did not materialize. "So the traffic forecasts were not just out by a little bit. They were completely potty; they were nowhere," Freud admitted. A £500m loss last year and over £1bn the year before have seen Eurotunnel plunge deeper into debt.
The situation was compounded on Friday when chief executive Jean-Louis Raymond resigned after a public brawl with the chairman Jacques Gounon. Raymond has now said that he is in the running for the chairman's post. “Many things have happened since Friday and now I am deeply convinced that we are going right into war with him. I feel I'm obliged to stand," he said.
"Eurotunnel is not an avenue for adventurers. The business has suffered too much from a board where amateurism and financial inexperience have blocked decisions," he added.
With the situation going from bad to worse, Eurotunnel can only pray that it finds some light and fast.
Posted
on : Tue, 14 Jun 2005 15:45 GMT | Business News
By : Mark Richardson
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