Eurotunnel Seeks More Funds
LONDON (AP) _ Eurotunnel said Monday it would raise up to $4.1 billion more from its banks and shareholders to finish its rail tunnel under the English channel.
The Anglo-French consortium said the cost of the 31-mile tunnel has risen to up to $12.4 billion due to soaring construction and borrowing costs. Only half the boring has been completed, the company said.
Last year, it said the project would cost $11.4 billion, and three years the price tag was at $7.93 billion.
The company said it would sell up to $815 million worth of new shares to its existing shareholders after it completed talks with its bankers about expanding credit facilities.
Eurotunnel said it expected to increase funds available to the project up to $13.8 billion from $11 billion.
″We are going to raise more than we need so we don’t have to go through this asking for extra finance exercise again,″ said Eurotunnel Deputy Chairman Alastair Morton.
Morton said that with the actual tunneling work half-finished, he was confident the extra funds could be raised.
Morton said tunneling progress has been satisfactory. ″We have gone from having a third of the actual tunneling work completed to having half of it done in just 16 weeks,″ he said.
Eurotunnel’s 208 banks already have put up $8.2 billion in credit. Eurotunnel said that it would seek release of additional funds from that credit line in June to cover operating expenses while it negotiated terms on additional credit.
The consortium blamed the increased costs primarily on added expenses forecast by its main contractor Trans-Manche Link, which cited inflation and the need to add workers to assure that the project is completed by its June 1993 target.
Eurotunnel also cited rising interest costs at a time of increased borrowing.
Some of the additional costs might be slightly offset by savings from a cost-control agreement reached in January between Eurotunnel and Trans-Manche Link, Eurotunnel said.
The strained relations between the two over disputed costs apparently have improved.
Morton said: ″The relationship between the two companies was always good at site-level. It’s now good on the day-to-day project level.″
But Eurotunnel noted that it still was in dispute over some costs with Trans-Manche.