EuroTunnel, the operator of the English Channel tunnel, is expected to propose drastic cost cuts in a bid to renegotiate nearly $11 billion in debt. The company is to unveil a three-year turnaround plan by Oct. 31, the opening move in talks with creditors including British bank HSBC (HBC
), France's Crédit Agricole and BNP Paribas, and U.S. reinsurance group MBIA Inc. (MBI
).
Unless creditors approve a new agreement, EuroTunnel will be unable to meet debt payments coming due in early 2006. Although unions representing EuroTunnel's 1,400 employees will fight bitterly, job cuts appear likely. The company on Oct. 19 reported that third quarter revenues fell 4%, as ferry operators cut prices to lure freight trucks and passenger cars away from Eurotunnel's rail shuttle service.
Copyright 2004, Bloomberg L.P.
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