French tighten grip on Channel Tunnel

THE FRENCH tightened their grip on the Channel Tunnel yesterday after Eurotunnel said it was abolishing the post of British co-chairman from the beginning of next year.

The move will leave management of the tunnel firmly in the hands of the French, reflecting the dominant position of French shareholders in Eurotunnel.

Sir Robert Malpas, the British co-chairman, is stepping down from the job on 1 January, 1999. His replacement, Charles Mackay, a former chief executive of Inchcape, will take the less senior role of deputy chairman. This will leave Patrick Ponsolle as executive chairman of the Anglo-French tunnel operator. The next most senior executive, the managing director George Christian Chazot, is also French as is his deputy, Alain Bertrand.

Eurotunnel said the change of title from co-chairman to deputy chairman reflected the role as it is and completed the move to a "single, unified, binational management structure". Although French executives now fill the three most senior roles, a Eurotunnel spokeswoman added: "They are Anglophiles; they speak perfect English and they spend a lot of time here."

She said that when Eurotunnel was battling to restructure its pounds 8.7bn debt mountain, it was important to have co-chairman on either side of the Channel. But now the restructuring was complete it made more sense to have just one chairman.

Under the restructuring, which was approved by its banking syndicate last November, Eurotunnel swapped pounds 2bn of its junior debt for equity and converted a further pounds 2.7bn into other forms of paper. The refinancing gave the banks an initial 45.5 per cent stake in Eurotunnel, potentially rising to just over 60 per cent depending on the extent to which other shareholders exercised warrants issued to them.

There are 620,000 French shareholders compared with just 145,000 in the UK. Before the restructuring, French shareholders controlled 60 per cent of Eurotunnel and UK investors 20 per cent. Because a number of banks have sold shares, the proportion of Eurotunnel owned by the banks has shrunk to 32 per cent. Individuals, mostly French, own 42 per cent and institutions 26 per cent.

Following the restructuring, a group of US banks led by Lazard Freres, Bankers Trust, Merrill Lynch and Bank of America have emerged as the biggest class of shareholders with a combined stake of about 12 per cent.