Government approval boosts Eurotunnel

The Government yesterday agreed in principle to extend Eurotunnel's concession to operate the Channel Tunnel, giving a significant boost to the group's hopes of completing its financial restructuring this month.

In a statement last night the UK and French governments said they were prepared to extend the licence from 65 to "at least" 99 years, if shareholders approved plans to restructure Eurotunnel's pounds 8.5bn of debt.

The deal would see the banks emerge with at least 45 per cent of the shares by swapping around pounds 4.5bn of their debt for shares and other forms of paper.

Earlier this week one large French shareholder switched sides and agreed to support the refinancing package, adding to the chances of the restructuring being approved at an extraordinary general meeting on 10 July. Investors angry at the package had been trying to amass enough votes to block the deal. UK and French investors speaking for 25 per cent of the shares need to attend in Paris or send in proxy votes for the EGM to proceed.

The Department of Transport said any deal would not be concluded until ways to increase railfreight traffic in the Tunnel had been agreed. A deal was also needed on sharing Eurotunnel profits beyond 2052.