Eurostar lands bailout from investors and French state
Struggling Channel Tunnel operator secures £250m as UK sits on sidelines
Eurostar has landed a £250m bailout from shareholders including the French government, securing the future of the struggling Channel Tunnel train operator, despite the UK’s refusal to join the rescue.
In a statement on Tuesday morning, Eurostar said it would get £50m in shareholder equity, £150m in loans guaranteed by investors, and a restructuring of £50m of existing loans.
“Everyone at Eurostar is encouraged by this strong show of support from our shareholders and banks . . . The refinancing agreement is the key factor enabling us to increase our services as the situation with the pandemic starts to improve,” said Jacques Damas, the company’s chief executive.
The package is led by France’s state-owned railway group and 55 per cent shareholder, SNCF, along with Canadian institutional fund manager Caisse de dépôt et placement du Québec, Hermes Infrastructure and the Belgian state rail operator.
The UK, which sold its 40 per cent stake in Eurostar in 2015, did not take part. Grant Shapps, transport secretary, said in February that Eurostar was “not our company to rescue” given it was majority owned by the French state.
There was a sense of vindication in the British government on Tuesday morning after the Eurostar shareholders agreed a bailout without any UK involvement.
“It’s about time, we always thought they could raise the money themselves but they tried it on with us,” said one official. “Of course it is wonderful news and a sign of optimism about good times ahead for travel.”
Eurostar, which has its headquarters in London, had been at risk of bankruptcy following a collapse in revenue after passenger numbers plunged during the pandemic.
Shareholders had already pumped in €200m to keep Eurostar afloat during the crisis, but the company said this money was “finite”.
This fresh rescue package, say people close to the company, should allow it to get through the rest of the crisis. “It will get us through most scenarios we can envisage over the coming months . . . And into next year,” said one such person. Eurostar has not provided figures for its monthly cash burn.
“With this package of support, Eurostar will be able to continue to operate this vital link and meet its financial obligations in the short to midterm,” said Eurostar in its statement.
Eurostar had called for rescue funds from the UK government in January, when it said there had been a 95 per cent decline in passenger numbers since March 2020.
But despite conversations with the UK government over the possibility of a state-backed commercial loan, London has maintained the French state and private shareholders should be primarily responsible for any rescue.
Eurostar said it was planning to increase the number of trains on its London-Paris route to two daily return services from May 27, and three per day from the end of June with a view to gradually increasing the frequency over the summer period as travel restrictions are eased.