AFTER MONTHS of largely fruitless negotiations on debt restructuring, Eurotunnel’s Executive Chairman Jacques Gounon threw down the gauntlet on April 12. He effectively challenged creditors holding £6·2bn of debt to settle on terms that would allow the company to operate profitably. The alternative was the uncertain prospect of trying to run the Channel Tunnel themselves under a process known as ’substitution’.

Eurotunnel had hoped to publish its 2005 accounts on April 12, but it appears that the auditors were unable to agree that the company was still a going concern. Gounon has freely admitted that without a massive write-down of the debt, Eurotunnel expects to run out of cash in January 2007.

French law requires the submission of accounts to shareholders at an AGM by June 30. Gounon has asked his creditors for a third waiver of conditions under the 1998 restructuring that preclude negotiations - the second waiver expired on March 31. The next would last ’until July 12 with a review planned in mid-May’. Gounon admitted that he saw this review as ’an opportunity to put pressure on the negotiations’.

Eurotunnel is banking on fears among its creditors that the French government in particular would reject any business plan they submit to trigger substitution. Given the number of institutions involved, and their conflicting interests, it is hard to imagine how agreement on a viable business plan could ever be achieved in practice. n