City File: Eurotunnel needs another rights issue

ANOTHER refinancing, almost certainly involving a rights issue to shareholders, looks increasingly inevitable at Eurotunnel, the Anglo-French Channel tunnel venture. Sir Alastair Morton, Eurotunnel's chief executive, is likely to confirm the new fund-raising plans with the announcement of interim figures tomorrow.

Though the company looks set finally to settle its long-running dispute over costs with the project's contractors, TML, other problems are emerging. The most serious is late delivery of high-speed TGVs to British Rail and SNCF, which means that neither will start using the tunnel for London-Paris traffic until the winter of next year at the earliest, much later than originally planned.

That in turn will create a revenue shortfall in the early months of the the tunnel's operation, prompting the need for fresh finance.