Eurotunnel - History

History

The Company was formed on 13 August 1986 with the objective of financing, building and operating a tunnel between Britain and France.

The Company let a contract for the construction of the tunnel to TransManche Link. The tunnel cost around £9.5bn to build, about double its original estimate of £4.7bn. The tunnel, which was financed partly from investment by shareholders and partly from £8bn of debt, was officially opened on 6 May 1994 by HM Queen Elizabeth II and President François Mitterrand. In its first year of operation the Company lost £925m because of disappointing revenues from passengers and freight together with heavy interest charges on its £8bn of debt.

Shareholders lost a huge amount of money initially (citeseerx.ist.psu.edu/viewdoc/download?doi...1... - United States) From which there was never a financially viable return.

In April 2004, a dissident shareholder group led by Nicolas Miguet succeeded in taking control of the board. However in February 2005 Jean-Louis Raymond, the Chief Executive who had been appointed following the boardroom coup during the previous year, resigned and Jacques Gounon took complete control becoming Chief Executive as well as Chairman.

In July 2006, shareholders voted on a deal which would have seen half the debt, by then reduced to £6.2bn, exchanged for 87% of the equity. However, this plan failed and, on 2 August 2006 the company was placed into bankruptcy protection by a French court for six months.

In May 2007 a new restructuring plan was approved by shareholders whereby Deutsche Bank, Goldman Sachs and Citigroup agreed to provide £2.8bn of long term funding, the balance of the debt was exchanged for equity, and the shareholders agreed to waive the unlimited free travel and other perks that they had enjoyed.

In Jun 2007 the company entered into a partnership through subsidiary Europorte 2 with the Port of Dunkirk relating to rail freight traffic; the company was to operate trains from Dunkerque to the Delta 3 logistics terminal at Dourges, and collaborate on container shipments to the UK using the port of Dunkerque via channel tunnel.

Following the restructuring, Eurotunnel was able to announce a small net profit - €1 million for 2007 - for the first time in its existence. Half-year earnings for 2008 rose to €26 million (£20.6m). The net profit for 2008 was €40 million, despite the costs associated with traffic loss (from September 2008 to February 2009) following a fire in the Channel Tunnel, and this allowed Eurotunnel to issue its first ever dividend of €0.04 per euro value.

The return to financial health allowed Eurotunnel to announce on October 28, 2009 the anticipated voluntary redemption of some of its convertible debt. By anticipating to November 2009 the reimbursement of debt due in July 2010, Eurotunnel aimed to issue up to 119.4 million new ordinary shares and thus shore up its capital while reducing its debt load.

In late 2009 Eurotunnel and SNCF acquired Veolia Cargo splitting the business between them; Eurotunnel took over French operations: the subsidiaries Veolia Cargo France, Veolia Cargo Link and CFTA Cargo acquired by Eurotunnel are expected to be rebranded as Europorte France, Europorte Link and Europorte proximity and become part of its Europorte freight business. Socorail has not been announced as being rebranded.

In Jan 2010 the Port of Dunkerque awarded Eurotunnel a seven year to operate its 200km railway system.

In June 2010 the company acquired FirstGBRf a British railfreight company for £31 million; this acquisition was to be merged into Europorte a subsidiary of the group. On 11 June 2012 a bid by Eurotunnel for three Channel ferries belonging to the former operator SeaFrance (in liquidation) for lease to another operator was accepted.