Judge and Jury: The only returns these investors are likely to get are return tickets

It was the fear of losing everything that ultimately persuaded Eurotunnel investors to back plans for a company restructure, says Reg Hoare, director at the Ludgate Group.

It was the fear of losing everything that ultimately persuaded

Eurotunnel investors to back plans for a company restructure, says Reg

Hoare, director at the Ludgate Group.



Given that Eurotunnel shares have fallen from a peak of 800p to 75p, one

is reminded of the difficult PR/IR task in hand of persuading

recalcitrant investors to approve the terms of the company’s

restructuring at last week’s shareholder meeting in France.



Unfortunately, the only available weapon to advisers has been the

somewhat blunt instrument of threatening them with the loss of their

final 75p should the deal not be approved, while no doubt bombarding

them with bumph.



Coupled with the unfortunate events of the fire, compounded on top of

cost overruns and construction delays, the project has been one that the

stock market bears have had a field day with.



Or have they? Because the truth is that despite all the negatives

predictions by the doom mongers, from a travelling punter’s perspective

it has been a great success, and the analysts and bears are no doubt

regular users of the product (first class, nocourse).



Meanwhile, bloody-minded French shareholders, having learnt a few

lessons from their bloody-minded lorry driver cousins, no doubt, have

been somewhat unrealistically trying to bully the company into giving

them better terms.



The problem remains that, even if the latest rescue act proves to be

successful, according to pessimistic City forecasts shareholders will

still not get much of a dividend, or perhaps even their money back. This

simple reality was not missed by any of last week’s coverage and in the

event the punters voted with their feet to accept.



Indeed, UBS’s transport analyst Richard Hannah, the doyen of Eurotunnel

bears for the last ten years, remains extremely sceptical of the future

prospects for investors. As he says, the story has moved on from the

’politics of shareholder/bank brinkmanship to a reassessment of the

underlying value of the shares’.



Fortunately for advisers, he is the only analyst who seems to be quoted

on the company’s situation and thus it seems they were able to frighten

investors into accepting the deal.



On that basis the worst is yet to come for the army of small

shareholders who are still gamely holding the shares for the benefit of

their travel perks.



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