Eurotunnel hires Lazard Freres, Lehman, Dresdner Kleinwort as advisers

By Jeff Pines

Washington, July 7 - Eurotunnel plc said it hired Lazard Freres, Lehman Brothers and Dresdner Kleinwort Wasserstein to advise it on a financial restructuring.

Lazard will be the overall coordinator. Eurotunnel's management said it selected Lazard and Lehman because of their track record with handling complex cases. Dresdner Kleinwort will provide the continuity in background knowledge, the company said.

Management has contacted its creditors and believes its creditors are willing to negotiate.

The Anglo-French company that manages the tunnel connecting France and the Great Britain is proposing cost savings of at least €40 million annually.

"As you are aware, Eurotunnel is a unique company. We, for our part, are aware of its shareholders' determination; we recognize the potential of its infrastructure, the quality of its customer service, the wealth of its Franco-British culture and the pride and commitment of its employees," said Jacques Maillot, chairman of the board, and Jean-Louis Raymond, chief executive, in a letter to shareholders.

"Unfortunately, in focusing on the single problem of its debt, Eurotunnel has lost sight of its main mission: to provide the most efficient services in the market to the greatest number of customers at the best possible price," they said.

Maillot and Raymond believe truck shuttles offer the company "considerable potential to generate income in the short and medium term."

Freight trains are another the management sees ripe for growth since Eurotunnel only accounts for 3% of the freight market between Great Britain and Europe.

Another potential area for growth is Eurostar, which connects London, Paris, Brussels and other destinations by rail. Management wants to negotiate a new rate structure that it believes will be profitable to it and the Eurostar operators, they said.

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