View Full Version : Ooh let's p*ss somebody else's money up the wall

17th June 2005, 12:45
from bbc news
Eurotunnel bosses under attack

Eurotunnel needs to come up with a debt restructuring plan
The management of Eurotunnel, the Channel Tunnel operator, is preparing for a rocky annual meeting on Friday as investors seek action on its finances.
Investors in the heavily-indebted firm are arriving in Calais, ahead of this afternoon's vote for a new chairman.

The two candidates have different rescue plans - current chairman Jacques Gounon wants creditors to write off debt without penalising shareholders.

Former chief executive Jean-Louis Raymond wants a debt-for-equity swap.

Calais showdown

The firm owes banks a total of £6.4bn ($11.54bn; 9.58bn euros) and the issue for the new chairman will be how best to secure the firm's future.

Each side is, in effect, competing for scraps of value from the Eurotunnel carcass

Jeff Randall, BBC business editor

How Eurotunnel went so wrong
Q&A: The crisis at Eurotunnel

Mr Raymond, who has proposed a new Anglo-French board, has suggested a debt-for-equity swap, an unusual move in France but one creditors are more likely to be receptive to.

He has the backing of shareholder activist Nicolas Miguet, who was behind last year's replacement of Eurotunnel's board of directors.

Mr Gounon believes the firm's creditors should write off about £4bn worth of debt without penalising shareholders.

17th June 2005, 13:27
Sorry dundee,

I don't get your title at all.

It's far from clear who this somebody else that you are referring to is?

There are only two players here, the banks and the shareholders.

17th June 2005, 14:19
The creditors.
Oh we can't afford to pay our bills, so I think we should just write them off, but we can still keep profits for our shareholders.

17th June 2005, 15:50
Well the points are:

1) the shares have already fallen 98% so many shareholders are holding a pretty major loss already.

2) A good chunk of the debt is accrued interest payments from the past 10 years.

3) Much of the debt is now in the hands of funds who bought the debt at 30p in the pound. By writing off a part of it they would simply be equalising their position.

In any case your choice of title is still meaningless. The shareholders are just people (like the banks) that put up some money in return for some reward later, to enable the thing to be built, they had no say in any of the 'management' mistakes.

There really isn't any fundamental difference between the two types of investor except for their position in the queue. But you seem to be saying that it is right (morally) for the banks to demand all of their money back whilst the shareholders get nothing, but wrong for the shareholders to suggest that both only get a part back.

Personally, I think we should keep the status quo. The tunnel is there for the next 60 years (it reverts to the governments thereafter), its economic position may change in the next 10 years (or it might not), so why make a binding decision now, why not wait a bit to see what happens. This isn't a Marconi, there isn't a closure option.