RNS Number:2294W
Eurotunnel PLC/Eurotunnel S.A.
08 March 2004
EMBARGO: Not for release before 0730 hours (UK time) on Monday, 8 March 2004
The Eurotunnel Board considers that the alliance of convenience seeking to
replace it has no credible strategy to ensure the future of the Group
The Eurotunnel Board has called for a vote against the dangerous and
opportunistic resolutions submitted to the General Meeting of Eurotunnel SA on 7
April convened by the "mandataire de justice"(a court appointed official).
Their only intention is to enable an alliance of convenience to take the place
of the present Board of Directors without any serious programme whatsoever to
ensure the future of Eurotunnel.
The Board notes that the main inspiration behind this comes from Nicolas Miguet
and Adacte, a French shareholder association, and that it represents the
culmination of several months of repeated attempts to destabilise the company.
It stresses the lack of transparency of these would-be "defenders of shareholder
democracy" who present, in the document setting out the grounds for their
resolutions, a catalogue of vague and pious wishes which are completely out of
line with the wild claims that they were still making only recently. In contrast
to the Galaxie Project presented by Eurotunnel's management, this empty
"programme" cannot hope to address the legitimate concerns of shareholders.
The Board considers that this amateur and improvised approach cannot address
Eurotunnel's fundamental problems, and disregards the considerable progress
already made by Eurotunnel's management teams who have turned the Group into a
model business in many respects.
Finally, the Board reaffirms its unanimous support for theGalaxie project,
which addresses simultaneously the fundamental problems of the company:
exclusively private sector financing, an excessively high level of debt, and
insufficient traffic from the rail operators.
Appendix: Report of the Board of Eurotunnel SA.
Note to editors: Documents relating to the AGMs on 7 April 2004 are available on
the Eurotunnel website: www.eurotunnel.com
Media enquiries:
Kevin Charles, Eurotunnel, tel: + 44 (0) 1303 288728
Giles Croot, Brunswick Group, tel: + 44 (0) 20 7404 5959
Investor enquiries:
Xavier Clement, Eurotunnel, tel: + 33 1 55 27 36 27
News release no. 880
Eurotunnel manages the infrastructure of the Channel Tunnel and operates
accompanied truck shuttle and passenger shuttle (car and coach) services between
Folkestone, UK and Calais/Coquelles, France. It is market leader for
cross-Channel travel. Eurotunnel also earns toll revenue from other train
operators (Eurostar for rail passengers, and EWS and SNCF for rail freight)
which use the Tunnel. Eurotunnel is quoted on the London, Paris and Brussels
Stock Exchanges.
REPORT OF THE BOARD OF DIRECTORS OF EUROTUNNEL SA ON THE AGENDA FOR THE ORDINARY
GENERAL MEETING OF EUROTUNNEL SA CONVENED EXTRAORDINARILY BY MR CHRIQUI, COURT
APPOINTED MANDATAIRE
Ladies and Gentlemen,
We strongly urge you to vote against the resolutions, which will be presented to
you at this General Meeting. Their only intention is to enable an alliance of
convenience to take the place of the Board of Directors of your company without
any serious programme whatsoever to ensure the future of Eurotunnel.
The main inspiration behind this comes from Nicolas Miguet and the French
shareholders association, ADACTE, and they represent the culmination of several
months of repeated attempts to destabilise the company, accompanied by
significant, abnormal movements in the share capital which have led Eurotunnel
to lodge complaints with the competent judicial and administrative authorities
for dissemination of false and misleading information and for manipulation of
the share price.
We will not dwell on the various court judgements against Nicolas Miguet in the
past. We would, however, remind you that when, in February, a French Court
awarded judgement against him for defamation of Richard Shirrefs, the Court
placed emphasis on "the unjustified, repeated, vulgar and personal nature of the
attacks made'' by Nicolas Miguet which "revealed a particular animosity'' on his
part and "which led the court to doubt the legitimacy of the objectives being
pursued by him.''
We will not dwell either on the fact that the so-called solutions proposed by
ADACTE are exactly the same as those which thatassociation has been advancing
for several years, however many times we have explained that they are
unrealistic.
But who really are these men with their short biographies who are seeking to
take control of your company? What is their real motivation behind what looks
like either a purely electoral campaign or a speculative battle? Do they have a
truly common project beyond this marriage of convenience? How many of them can
claim to have successful experience in the management of a major infrastructure
project? By demonstrating today their inability to put forward British, as well
as French candidates, have they really understood the essential bi-national
nature of our Group?
These would-be defenders of shareholder democracy should at least be transparent
towards you, the shareholders. Instead, this disparate coalition:
* ignores the real issues facing the company and what the management has
done to address them;
* presents a catalogue of vague and pious wishes, which are completely out
of line with the wild claims being made only recently by their principal
spokesmen;
* a catalogue which in contrast to our Galaxie Project, cannot hope to
address the legitimate concerns of shareholders.
**********
Your company has made good progress since the last financial restructuring in
1998, whatever they may say,
* undisputed leadership of the cross-Channel transport market with 47% of
the car market and 43% of the truck market;
* a punctuality rate for our shuttles of over 98%;
* a 10% reduction in real terms in operating expenditure, notwithstanding a
doubling of the truck activity;
* a world-class standard of safety;
* absorbing the disappearance of #100 million annual profits when duty-free
sales ended;
* successfully dealing with the problem of asylum seekers;
* a reduction of the debt by #1.2 billion;
* winning the first rail freight operator's licence in France since the
market was opened up.
Of course, much remains to be done. But, after so much effort, your company has
clearly become not only a leader, but also a reference point, in so many areas.
**********
Our opponents claim that they can do better. But what are they proposing to do?
* Up to now, they have been saying in the media, that it was simply a
question of cancelling a large part of our debt. And yet today they propose
merely "to examine all the ways in which the weight of the debt can be
reduced globally.''
We all know that Eurotunnel's debt is unsupportable, even if, since the 1998
restructuring, we have single-mindedly reduced it by #1.2 billion.
However, it is incredibly naive, if not dishonest, to suggest that we could
unilaterally oblige our lenders to reduce their debt with nothing in return! In
fact, if the company suddenly refused to pay them, our creditors enjoy rights
(the right of substitution) which would enable them to take control of the
Tunnel and to operate it themselves until total repayment of their debt.
This would cause Eurotunnel shares immediately to lose all of their value. Is
this really what we all want?
* Upto now, yet again, it has just been a question of making Paris, London
and Brussels foot the bill. Today they are simply asking for a "review of
all the aids concerning cross-Channel traffic'' and the "intervention by
Europe and the governments, for which the best methods will have to be
determined.''
The emptiness of this proposal is in stark contrast to the recent radical
declarations of our opponents in their demands for public financial support. Are
they beginning at lastto understand the 1986 Treaty of Canterbury, which
founded the Channel Tunnel, and which prohibits all "recourse to government
funds or to government guarantees of a financial or commercial nature?'' Have
they finally listened to the two governments, which, on several occasions in
recent weeks, have repeated their refusal to provide any subsidy or guarantee to
Eurotunnel?
* Up to now, they thought it urgent to increase the tariffs paid by rail
operators. Today, they hardly mention this. Have they finally understood
that, on the contrary, only a reduction of these tariffs will enable a
development of the traffic and accordingly of our business? And furthermore
the rail operators are certainly not about to accept an increase in tariffs
that have been fixed contractually until 2052!
* Lastly, they have not until now ventured to discuss our shuttle service,
even though it is our principal activity. Today, in order to say at least
something about this essential subject, they merely call for "an aggressive
and more focussed commercial strategy, without necessarily reducing the
levels of average revenue.'' Who are they trying to fool?
Enough of this, since our opponents are clearly incapable of stating in writing
to you what they have been proclaiming in the media for months. Are they finally
beginning to understand, as we have repeatedly stated, that their proposals are
completely unrealistic?
**********
Coming back to their current proposals, or what is left of them:
They claim to want to "change the current corporate governance of the company''.
According to them, the candidates for the Board would have "precise roles.''
Eurotunnel has always succeeded in bringing together on its Joint Board top
level men and women from the business world with recognised experience in the
areas crucial to Eurotunnel's business: rail transport (Chris Green), tourism
and communication (Charles Petruccelli and, soon, Philippe Bourguignon), road
transport (Yves Dejou), marketing and distribution (Vivienne Cox, Keith Edelman,
Charles Mackay) and finance (Francois Jaclot, Philippe Lagayette).
What are the real capabilities and experience of most of the candidates in the
management of major infrastructure projects of this type?
On another point, Eurotunnel has always been at pains to respect scrupulously
the balance between French and British nationalities on both its Joint Board and
its management team. And yet what is proposed to you today is a team which is
totally French, to be completed in due course with hypothetical candidates of
other nationalities. When this would happen nobody knows - but certainly not
until after you have voted. Where is the better corporate governance? Where is
the shareholder democracy?
Finally, they state that they may wish to change the legal structure of
Eurotunnel SA. Are they aware that such a change cannot be transposed into the
UK company, Eurotunnel plc, and that it would imply a complete upheaval of the
whole Group? Are they unaware that, under the Articles of Association of the two
companies, being a director of the one also means being a director of the other?
They claim to be able "to build up operations''.
How do our opponents envisage increasing the operating profit to 550 million
euros (#380 million), which means an increase of 300 million euros (#210
million) and not 100 million euros (#70 million), as they mistakenly state, and
this regardless of the fact that the guaranteed level of railway revenues comes
to an end in 2006? Have they forgotten that Eurotunnel has always produced a
very high level of operating profits since 1997 (even in 2003, at 30% of
turnover) and that our company is a model in the organisation of rail traffic?
Do they mean to cut staff or safety expenditure? Are they unaware of the fierce
competition from the ferries? Do they presume to tell our engineers, maintenance
personnel, sales agents or train drivers how to do their jobs?
How can they propose to abandon the freight terminal project in Folkestone when,
for a limited cost, this investment would finally permit the crucial opening of
the British market to continental trains? What can one think of a development
strategy that starts by abandoning a vital investment? An investment which, in
addition to our own new activity as a rail freight operator, will encourage the
development of the traffic of all operators (including SNCF, which will enjoy
the greatest benefit), will multiply the number of freight trains using the
Tunnel and, not least, will help to conserve the environment. But are our
opponents interested in all of this?
And finally, in concrete terms,do they really have a "programme'' to develop
the business and improve its results?
They think that they know how to "manage the political issues linked to the
public service nature of the Tunnel,'' and also to have the miraculous solution
for "reducing the debt''.
We have discussed this earlier. But between the wild claims of recent months and
the empty phrases of their manifesto, who can you believe and what can you
expect from them?
**********
Can one seriously describe what our opponents are proposing to you as a
"programme''?
This sort of amateurism and improvisation cannot address the fundamental
problems of Eurotunnel. More than anything else, it betrays complete ignorance
of the realconstraints that weigh on our Group and in no way offers a strategic
response to the true challenges that our Group is facing.
We are convinced that, if you approved these resolutions, all our shareholders
would run a real risk of a total loss of their investment - and we mean a total
loss.
As for ourselves and our teams, we have prepared and presented the Galaxie
Project, the only comprehensive plan currently on the table. It simultaneously
addresses the three fundamental problems of the business: exclusively private
sector financing, an excessively high level of debt, and insufficient railway
traffic. This is why the project serves as a credible working basis (and is
judged as such by our partners) for the technical, financial and political
discussions taking place on both sides of the Channel.
This is a comprehensive plan: it represents a real strategy for the company, it
demonstrates a clear vision of the cross-Channel industry and the complementary
roles of the different players, and it should permit a return to financial
health, and therefore to the payment of dividends, in the not too distant
future. At last! After so many years of effort and patience!
It is with this ambition that the Board reaffirms its unanimous support for this
determined and realistic project. And it is for this that we need the widest
possible support from you, the shareholders, to bring to a successful conclusion
the long and complex negotiations that are involved.
Like all of you,we are proud of the magnificent achievement that is the Channel
Tunnel. But, even though we are also proud of having made Eurotunnel a model
operation, we are well aware of the further road down which we need to travel
together in order to achieve what we are all dreaming of: a company which is not
only successful and prestigious, but also profitable and rewarding for its
shareholders.
Let's give a real chance to this project, which is finally within reach! Don't
let's give up so near to this goal!
We call on you to express your confidence in this new future for Eurotunnel by
voting against the dangerous and opportunistic resolutions presented to this
General Meeting.
The Board of Directors
This information is provided by RNS
The company news service from the London Stock Exchange
END
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