Aux armes, actionnaires!

French democracy is in full swing, but the spirit of Revolution is alive and well sous la Manche. Eurotunnel’s small shareholders, having seized control of the company, are prepared to go down — and determined to go down fighting. Their weapon is the private investors’ right to be irrational, voting on prejudice and putting the questions at shareholders’ meetings that pension funds are too polite to utter. In other companies, their holdings add up to little, leaving sober institutions to impose reason — but at Eurotunnel the big funds sold out long ago to cut their losses. The small fry are in charge. Mostly French, they own 94 per cent of the shares and are fighting a debt-for-equity swap that would hand their company to the banks. Having lost so much of their money, they’re ready to gamble what little is left and go for bust.

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.