- The Washington Times - Wednesday, August 2, 2006

PARIS (AP) — A Paris court accepted Eurotunnel’s request for bankruptcy protection yesterday after talks on restructuring its $11.6 billion debt failed.

The decision by the Paris Commercial Court gives the Anglo-French company that operates the tunnel linking England and France beneath the English Channel a six-month stay from creditors, allowing it to return to the negotiating table.

The tunnel operator filed the request last month after it was unable to reach a deal with bondholders on debt restructuring.

Passenger and freight rail traffic through the tunnel has not been disrupted by the financial problems.

Eurotunnel and its main creditors had agreed on a restructuring plan in May, but the deal was rejected by holders of Eurotunnel bonds, who said it didn’t give them enough back on their investments.

Jacques Gounon, Eurotunnel’s chairman and chief executive officer, expressed “great satisfaction” with the decision, saying he was “convinced” that the company would reach an agreement with shareholders during the six-month stay.

The court appointed two judicial administrators to work with Eurotunnel on the restructuring and named two judicial administrators to work with creditors. Should a deal not be reached during the six-month period, the court can renew the stay for up to 18 months.

Before the court’s decision, representatives of Deutsche Bank and other senior creditors met yesterday with Eurotunnel for continued negotiations on a debt deal.

“We made progress this morning,” Jacques-Henri David, head of Deutsche Bank’s French operations, told Dow Jones Newswires.

Eurotunnel’s troubles date to the project’s launch in the 1980s. The costs of digging the 30-mile undersea rail tunnel between Britain and France were massively underestimated, and traffic predictions proved optimistic.

Eurotunnel was expected to default on its debt repayments early next year if no agreement was reached.

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