Eurotunnel completed on Thursday 24 December 2015 the removal of the monolines Ambac1 and FGIC2 as guarantors of the Channel Link Enterprises Finance (CLEF) Notes.
In June 2007, as part of the financial restructuring of the business, Eurotunnel borrowed £1.5 billion and €2.0 billion under a term loan facility. This facility includes tranches of inflation-linked, fixed rate and floating rate loans with final maturity dates ranging between 2041 and 2050. In August 2007, all of the loans under the facility were purchased by a newly incorporated special purpose vehicle CLEF Plc. These CLEF Notes included a number of inflation-linked tranches of notes credit-enhanced by either Ambac, FGIC or Assured Guaranty3. In return for providing these guarantees the monolines received a fee over the full duration of the loans.
In order to simplify its capital structure and benefit from increased flexibility going forward, Eurotunnel has sought the removal of Ambac and FGIC as guarantors of the CLEF Notes; this is rendered possible by the high degree of predictability of the Group’s financial results. Assured Guaranty will remain as the sole guarantor of certain index-linked tranches of the CLEF Notes and is currently rated AA by S&P and A2 by Moody’s.
The fees incurred in the removal of Ambac and FGIC (including payments to FGIC and Ambac in lieu of payment of their ongoing guarantee fee and various consent fees) will be compensated by a net reduction in the on-going interest costs over the life of the inflation-linked loans.
This simplification will enable Eurotunnel to pursue a possible refinancing of its floating rate debt, subject to market conditions.
1 Ambac Assurance (UK) Limited
2 FGIC (UK) Limited
3 Assured Guaranty (Europe) Ltd (formerly Financial Security Assurance (U.K.) Limited
Less than a week after Le Shuttle Freight carried the 23 millionth truck through the Channel Tunnel since commercial services started, Eurotunnel has hit a new all-time record, beating the previous high1 set in 2012, the year of the London Olympic Games.
Buoyed by the new truck terminal security put in place in October 2015, Eurotunnel’s Le Shuttle Freight service has had a record year in 2015, carrying more than 1,464,880 trucks2 in both directions between Folkestone (Kent) and Coquelles (Pas- de-Calais). This is the highest level of traffic generated since the start of commercial services and has been achieved more than a week before the year end.
This extraordinary performance is proof of the confidence that transporters from across Europe have in Eurotunnel and its staff and is recognition of the competitive advantages of the Shuttle service, compared to ferries, with its high departure frequency, 24 hours per day, 365 days per year.
With 45% infrastructure capacity still available, 3 new Truck Shuttles on order and a market which continues to grow, the outlook for Eurotunnel is positive
- (1) 1,464,880 trucks carried between 01.01.2012 and 31.12.2012
- (2) Data as at 22.12.2015 at midnight
When the Competition Appeal Tribunal (CAT) confirmed in December 2014 previous decisions by the Competition and Markets Authority (CMA), which sought to prohibit the operations of MyFerryLink, the Eurotunnel Group decided, on 9 January 2015, to sell the business and its related assets. The activities of MyFerryLink ceased on 29 June 20151.
The SCOP SeaFrance, which operated the MyFerryLink ships, appealed that decision and won their appeal in front of the Court of Appeal in May. The CMA then further appealed that decision to the Supreme Court, which upheld the decision by the CAT and brought an end to the possibility of the Eurotunnel Group being able to operate a maritime service between Dover and Calais.
The Eurotunnel Group is extremely disappointed by this decision as MyFerryLink had proven its capacity to provide a high quality, competitive service. MyFerryLink had hoped to restart an activity with the freight only ferry, Nord-Pas-de-Calais, which would have ensured 130 jobs. As the decision by the Supreme Court no longer permits this, the Eurotunnel Group will put its last ship, the Nord-Pas-de-Calais, up for sale.
1 The other two ferries, Berlioz and Rodin, have been leased to DFDS since the 15 September 2015