The chairman of Eurotunnel has branded as “crazy” the moves by shareholders who are threatening legal action over a downgrade in their travel perks.

Jacques Gounon said yesterday that the 4,000 shareholders who will lose their right to unlimited trips through the tunnel at £1 a time would forfeit their shares, too, if they did not rally to support the company.

He spoke as Eurotunnel sought shareholder support for a debt-for-equity swap deal that will wipe out much of the company’s debt mountain. Eurotunnel has until May 15 to secure the support of 60 per cent of voters.

“The life of the company is at stake,” Mr Gounon said. “If the exchange offer is unsuccessful . . . we are dead. It is only these 4,000 people who are claiming to keep free access indefinitely, which I think is something quite crazy. If the company is bankrupt on May 16, they will lose both their shares and their privilege.”

The 4,000 shareholders invested money in the transport group when it floated in 1987, investing a minimum of £5,250 to guarantee the perk, which was scheduled to expire in 2082. Mr Gounon said: “Perhaps shareholders could have wondered: is it reasonable for a company to be so attractive to propose free, open use of its services? It’s so attractive that it is not normal.

“We must make people understand that the existing Eurotunnel has no future and that the new [company] could represent a future.”

Refinancings and a weaker-than-expected operational performance have left Eurotunnel shares worth only a fraction of their initial value. If the exchange offer is successful, Groupe Eurotunnel, a new vehicle, will take control of the Eurotunnel businesses.

Eurotunnel says that it must treat all shareholders equally to comply with French regulations. The company proposes adopting its most recent shareholder privileges scheme, introduced for 46,000 other shareholders in 1996, for all investors, providing for a 30 per cent discount on three return trips a year.

About 15,000 shareholders are thought to be prepared to transfer to a less-generous privileges scheme if shareholders back the tender offer.

The Eurotunnel Foundation Shareholders’ Action Group (Etag) has written to the company as a first step in legal proceedings. Mr Gounon said: “There is no room for litigation. When the court decided there should be one category of shareholder, this free privilege was killed.”

He also suggested that founder shareholders were not in as “dramatic” a situation as they had suggested, arguing that over the past ten years they could have covered the cost of the investment by using the Eurotunnel service four times a year.

His comments came as Eurotunnel reported a 10 per cent rise in first-quarter revenues in its core rail services to £75.8 million. Total revenues fell 9 per cent to £118.5 million because of the removal of the minimum usage charge, which it charged to Eurostar and freight companies. The charge brought in £20.8 million in the first quarter of last year, but the agreements ran out in November.

The planned debt-for-equity swap will reduce Eurotunnel’s debts from £6.2 billion to £2.8 billion.

By agreeing to the debt-for-equity swap, Eurotunnel shareholders could hold as little as 13 per cent of Groupe Eurotunnel. However, that figure could rise to 67 per cent if the company repays a £1.3 billion convertible loan note over the next three years.

— Tunnel story

March 1985 Britain and France call for proposals for a cross-Channel link

January 1986 Eurotunnel beats three rival proposals

August Eurotunnel Group formed

December 1987Tunnel boring begins

May 1994Tunnel opens

December Eurotunnel begins rail service for cars

November 1997 £8.7 billion debts force debt-for-equity swap

April 1998 Financial restructuring completed

Apr 2004 Nicolas Miguet, activist shareholder, forces boardroom coup

February 2005 Jacques Gounon appointed chairman

April Opens negotiations with creditors

June Mr Miguet backs Mr Gounon

August 2006 Placed under bankruptcy protection in France

December Selects Goldman Sachs and Deutsche Bank to lead refinancing

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