Eurotunnel

Aux armes, actionnaires!

Richard Northedge

28 April 2007

Eurotunnel, of course, is already technically bust and has been for years, but by refusing to accept that financial fact, the small shareholders have filibustered sufficiently to ensure the life-support machine is never switched off. The trains still run, but the company has paid no interest on its £7 billion of debts since 1995. Not surprisingly, existing equity holders don’t believe warnings that Eurotunnel will be forced into liquidation unless they accept a new refinancing that would dilute their stake to 13 per cent. And this time not only are French investors in rebellious mood, but there is also vociferous opposition from the diminishing band of British shareholders who subscribed when Eurotunnel was floated 20 years ago. The shares were offered immediately after the 1987 stock-market crash when Eurotunnel needed private investors to ensure it raised its £750 million: as an inducement, subscribers were offered free travel for life.

Some people bought shares solely for the perk; some also bought property in France, expecting to rely on Le Shuttle — in the days before Ryanair. They had to wait seven years to catch a train, but as they’re still waiting for their first dividend and the shares have lost more than 90 per cent of their value, the perk is the only return the shares have ever provided. Now these 4,000-odd founder shareholders have been told the perk must go when the banks take control.

Not surprisingly, the British shareholders are now considering the revolutionary tactics employed so successfully for so long by their French counterparts. The tunnel was still two years from opening when the first dissident group — L’Association Pour L’Action Eurotunnel — was set up in 1992. There are now several other groups. They have hired trains to carry protestors from Paris to Eurotunnel’s Calais offices, and marched on the British embassy.

Indeed, small shareholders have used every method, fair and foul, to express their fury at Eurotunnel’s dire performance. The company accused them of manipulating the share price and distributing false and misleading information — then sued over their slanderous counterclaims. Feisty French banker Sophie L’Helias mobilised private investors to act en masse — either voting against the board or playing for time by refusing to vote, rendering meetings inquorate. The courts have been used to demand extraordinary meetings and the dissidents famously voted every director off the board in 2004 and appointed their own — so delaying the refinancing yet further. This is investor activism, French style.

But as in all revolutions, factions have fallen out after seizing power. A new chairman, Jacques Maillot, quit after less than a year; a new chief executive, Jean-Louis Raymond, attempted a coup — and also swiftly departed, leaving Jacques Gounon holding both titles. Now that the new guard has eventually negotiated terms with the banks, a newer guard — led by former presidential candidate and convicted fraudster Nicolas Miguet — is opposing the settlement.