City: Digging up dirt

LESS than a couple of weeks ago, Eurotunnel was prompted by French press reports into issuing a denial that cost overrun negotiations with Transmanche Link (TML), the channel tunnel contracting consortium, had broken down for good. Last week, TML issued a press release which said precisely the reverse; they had broken down after all. Privately, TML went further. In fact, insiders suggested, talks have been at a standstill since mid-summer. Eurotunnel kept up the charade of continuing talks just to keep its bankers happy and stop a key banking covenant being breached, they claimed. Followers of Europe's largest civil engineering project will recognise all this as another everyday story of tunnelling folk.

Should we take it seriously this time, or is it merely another staging post in the epic game of negotiating brinkmanship which has characterised Eurotunnel since it was floated five years ago? On the face of it, the present row looks worse than previous quarrels. TML is threatening a go-slow if it isn't paid in full. Every month's delay in opening the tunnel costs Eurotunnel about pounds 100m in lost revenues and interest payments. So pay up, says TML; if you don't, it will end up costing you more than you owe us.

Blackmail, yells Sir Alastair Morton, Eurotunnel's combative chief executive, or chantage if you happen to be part of the French contingent. Bankers could, I suppose, intervene and force Sir Alastair to do a deal, but their interest in the project is essentially the same as the shareholders; they are on Sir Alastair's side in wanting to see it completed for as little money as possible. The whole thing looks destined to end up in the courts. In the meantime, shareholders can only pray TML comes to its senses and backs away from its threat. A go-slow would be in no one's interests.