Eurotunnel warns of 2010 loss if insurance unpaid

Cross channel rail operator Groupe Eurotunnel warned it would not post a profit in 2010 unless it received further insurance payouts.

Eurotunnel warns of 2010 loss if insurance unpaid

 

Cross channel rail operator Groupe Eurotunnel warned on Monday it would not post a profit in 2010 unless it received further insurance payouts for a tunnel fire in 2008.

"Clearly it is not the traffic that is pushing us into the red, it is the insurance," Chairman and Chief Executive Jacques Gounon said during a conference call.

Eurotunnel made a first-half loss of 45 million euros ($58.4 million) on 22 percent higher sales of 331 million. It booked 33 million euros in insurance indemnities last year but Gounon said the company only received half of that.

It is awaiting the payment of the rest as well as another 59 million euros blocked following a legal challenge by train operator Eurostar.

Eurotunnel and Gounon are no strangers to legal challenges and disputes that have been dogging the firm since its ambitious construction started in 1988. Gounon negotiated a massive debt restructuring that won final court approval in January 2007.

Goldman Sachs is currently the biggest shareholder with a stake of 17 percent, according to Thomson Reuters data, while Franklin Mutal and M & G Investment, a unit of Prudential Plc, own stakes of less than five percent.

Goldman Sachs Infrastructure Partners and M&G's Infracapital are in the GB Speedrail consortium bidding to run the High Speed 1 link between the tunnel and London's St. Pancras station.

Gounon said the consortium would file its bid before the Aug 17 deadline after having been preselected.

A spokeswoman for Eurotunnel said the main lead insurer was XL Group Plc while Scor and Axa were also in a consortium. A spokeswoman at XL was not immediately available for comment while the French firms referred to XL.

"It is clear that today the insurance firms, which have very well supported the company in 2008-2009, are now in a waiting attitude," Gounon said, calling upon Eurostar to drop the legal challenge.

At Eurostar there was no immediate comment.

Eurostar, controlled by the French and Belgian railways and Britain's LCR, runs passenger train services throgh the tunnel while Eurotunnel runs shuttles with trucks and cars.

Eurotunnel shares were 1.37 percent lower at 5.85 euros for a market capital of 2.8 billion euros. They gained 51 percent over the past year.
 

Reuters

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