Eurotunnel considered this so outrageous that it went to the Disputes Panel set up under the Construction Contract. However, the Panel ruled that the matter should be dealt with at a higher level by the Arbitration Tribunal.
This was a severe blow, although it was reversed when the dispute was eventually considered by the Arbitration Tribunal. It was becoming evident that, while Eurotunnel had sufficient funds to open, there would be a need for further funds after opening, mainly to pay bank interest until cash flow breakeven. Again, Eurotunnel had to operate under waiver from the banks and wanted a bridging arrangement to defer any equity funding, if it was needed, until after the first full summer of operation.
A long waiver was agreed together with a programme to develop a funding plan with the banks. The usual debate followed about the needs for equity, the amount and the timing. After considerable discussions, Eurotunnel reluctantly agreed to raise equity at or around the date of the official inauguration by Her Majesty, Queen Elizabeth II and President Mitterrand in May The final problem was that the construction companies were behind schedule making negotiations more difficult for Eurotunnel.
This led to an agreement in July to separate the claim from the construction work, while Eurotunnel would take on much of the commissioning to proceed from the completed tunnel to a fully operating company. The site was handed over to Eurotunnel in December The contractors' main claim was settled in April considerably reducing the uncertainty for existing and potential investors.
This was settled in November A prerequisite for the launch of the rights issue in Equity 5 was obtaining the first operating certificate from the IGC. Investors had to know that the system worked. A certificate covering all four services using the Tunnel would have been preferable, but only the initial certificate for Le Shuttle Freight was awarded, and they were barely operating. On the debt side, these project milestones were also important, but in addition the banks, particularly those in Japan, wanted evidence of continued official support for the project.
After prolonged discussion, the two governments agreed to extend the Concession by 10 years and Eurotunnel dropped certain claims against the governments. This was an important signal for the banks. The round of funding added a new feature to Eurotunnel's financing—known as Senior Debt.
Many alternatives were considered in a series of discussions which developed into one of the most intense and prolonged arguments of the project's history—mostly between the banks themselves.
Table 2 shows the equity issues. The equity issues were larger than by normal standards of the equity market, and it was creditworthy that after one sizable equity issue, Eurotunnel succeeded in returning to the market twice with further very large issues.
The warrant issues listed under potential additional equity sources are now history. The first one, the Founder Warrants was successful because TML was obliged to take them up as part of the settlement. The purpose of issuing the original warrants was to interest French investors since the travel privileges offered to shareholders were only really of interest to the British. This is just one example of many enormous complications involved in making a bi-national issue and dealing with regulations of the London Stock Exchange as well as the Bourse de Paris.
Table 3 shows the debt structure. The loan is currently structured in 12 tranches to accommodate different currencies and different types of loan.
Administering this innocent-looking structure even without a crisis in the company is a very complicated task. The problem is that no matter how hard lawyers try to account for every eventuality, no matter how many hundreds of pages of clauses they draft, the documentation simply cannot meet the test of reality.
So what happens is that exemptions and waivers have to be sought, and frequently the documentation itself has to be changed, which means drawing lawyers back into the process at large cost. In principle this should be done reasonably smoothly but when there are more than banks amongst whom agreement is required, the difficulties can only be imagined.
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Corporate Information Welcome to eurotunnel. The On-line content editor Eurotunnel is designated as the on-line content editor of the Website www. Eurotunnel is a partnership between: France Manche S. Contacts You can contact us by email: customer. The host of the Website The web site www. Project timeline Development History of the project The idea of a tunnel under the English Channel has a long history, with the first proposal dating back to , and several others following over subsequent years.
Policy and planning setting The Channel Tunnel was approved with the signature of the Treaty of Canterbury signed by the French and UK Governments on 12 February , which authorised the construction of the Fixed Link as a concession without any public financing or guarantees.
Alternative options considered In , a call for proposals received several submissions of varying designs. Four were shortlisted: Euroroute, a hybrid solution of a bridge-tunnel- bridge GBP4. Long-term benefits The Channel Tunnel project has driven transport infrastructure improvements of the road and rail networks in France and the UK that connect to, and are associated with, the tunnel.
Procuring and financing Procurement process The project was procured using an open form of tendering. Financial structure The Treaty of Canterbury and the Concession Agreement established that the project would be entirely financed, delivered and operated by the private sector. Currency risk and credit ratings Due to the cross-border nature of the project between two countries with different currencies the French franc and, since , the Euro in France, and the pound sterling in the UK , Eurotunnel has structured its debt and established its operations in both currencies to mitigate currency fluctuations.
Harmonisation of rules, procedures, and technical standards Technical standards for the Channel Tunnel relate mostly to safety and interoperability.
Arbitration issues Arbitration has occurred twice in the history of the Channel Tunnel. Accountability The management of the Channel Tunnel is held accountable by means of transparent reporting of related activities.
This monitoring is conducted by railway undertakings and in collaboration with Eurotunnel. Conclusion Political will — The Channel Tunnel could be realised thanks to strong political will from both the French and UK Governments wishing to build a fixed link between the UK and the rest of Europe.
In hindsight it is possible that, had design been completed and agreed upon with the IGC before construction started, the project may have avoided some of its financial difficulties. This demonstrates the importance of proper planning and design to the successful delivery of infrastructure. This policy and planning setting, involving both countries on an equal footing, has provided certainty to the development and management of the project and is exemplary in terms of project governance.
Long-term benefits — The Channel Tunnel is one of the longest tunnels in the world for freight and passenger transport. Channel Tunnel passenger trains allow for fast travel between the city centres of several EU capitals and cities at a low environmental footprint compared to private cars, airplanes and ferries.
The choice of a rail tunnel is also safer in terms of the lower risk of accident, but also faster than the ferry, and more frequent than flights. Download the case study [PDF]. The initials GET are already used on stock exchanges for Groupe Eurotunnel, and the new name is also believed to be easily pronounceable by its French chief executive, Jacques Gounon. The group, which was forced to give up its own ferry service by competition authorities, also owns Ciffco, a European railway training centre, along with its rail freight and power businesses.
It has the concession to operate the Channel Tunnel until
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