Eurostar secures £250m refinancing deal to stave off bankruptcy

Eurostar’s shareholders have pulled together funds from bank loans, deferred payments and from their own pockets to secure a £250million refinancing deal to save the company from bankruptcy.

“This refinancing is a major step towards securing Eurostar’s future,” Eurostar chief executive Jacques Damas said in a statement.

Eurostar’s majority shareholder is the French national railway company SNCF, which owns 55% of the company and headed up the refinancing effort.

The UK government sold its stake in Eurostar in 2015 and has refused to participate in the financial bailout of the company.

The train operator, which connects the UK to France and other European countries, has struggled during the Covid-19 health pandemic as international travel has been severely reduced.

Pre-pandemic, the company was transporting over 11 million passengers per year, but in November last year it reported a 95% drop in passenger numbers since March 2020.

As a result, its yearly revenue dropped from €1.1 billion pre-pandemic to €220 million 2020.

The head of SNCF Voyageurs Christophe Fanichet said in a press release:

“SNCF Voyageurs is happy with this refinancing, which is a major step towards ensuring the future of Eurostar and its lines between the continent and Britain.

Eurostar, which is based in the UK and operates under UK law, had previously asked both the UK and French governments for help but none was forthcoming.

Eurostar facing collapse as France-UK travel restricted

Briefings in London said that as the company was foreign owned - as well as SNCF, other owners are the sovereign wealth fund of Quebec, the US-based Federated Hermes infrastructure fund, and the Belgian state railway SNCB - the UK government did not see a benefit in bailing it out.

At the same time the French government was reluctant to give help to a UK company at a time when Brexit meant that guarantees available under the European Union were not valid.

An indication of how far the company has fallen out of public consciousness in France is given by the fact that the refinancing measures were hardly reported on in the press or TV news.

Details of the refinancing are that £50 million will come directly from the shareholders, another £150 million will come from a loan to Eurostar from banks, guaranteed by the shareholders and the last £50 million from restructuring payments on loans which have already been taken out.

The shareholders have already put in €210 million in the last few months to keep the company running and have not taken any dividends for 2020.

It says the refinancing will assure its future in the “short and medium term” but attempts by The Connexion for more specific details were not answered.

For tech companies, medium-term plans can be as short as a couple of months, while in more traditional ones the usual interpretation is two years.

The 1,000 or so staff have had all bonuses cut and many have been put on the UK government’s furlough scheme and the French chômage partiel scheme, and suppliers have been asked to wait for payment.

Rents to use the tunnel, which are based both on fixed costs and on the number of trains per day, have continued to be paid, according to Getlink, the company which owns the tunnel and which runs the Le Shuttle car and lorry services through it.

From 27 May, Eurostar will increase its services to two daily London-Paris return trips instead of the one that it has been running for months during the pandemic.

The company plans to add a third train each day by the end of June and will gradually increase this number over the summer as travel restrictions are eased.

It said it will also use the opportunity of the refinancing to restart the project of a merger with the Thalys rail network, called Green Speed 3, which will allow single ticket booking between Eurostar and Thalys trains, which run between France, Belgium, The Netherlands and Germany.

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