Eurotunnel investors get first dividend

[John Ashworth]

Eurotunnel investors get first dividend since 1987

Tim Webb
The Guardian, Thursday 5 March 2009

About 80,000 long-suffering British shareholders in Eurotunnel were 4 euro cents a share better off for their troubles yesterday after the company announced the first dividend since its flotation in 1987.

Eurotunnel, which announced a €40m (£35.6m) net profit - only the second in its history - for last year, said it was paying €7.6m to shareholders.

Jacques Gounon, chairman and chief executive, defended the meagre payout by promising that it would be the first of many. "It [the payout] was not because it's an exceptional dividend. It's because we want to start a dividend policy," he said.

Eurotunnel makes most of its money by charging cars and lorries to use its roll-on shuttle rail service between Folkestone and Calais. It also charges Eurostar to use a separate tunnel for its passenger rail service and runs freight trains.

A big fire in September closed part of one tunnel for almost six months, which restricted services and reduced profits. Gounon said that many hauliers had switched to using the ferry. A previous fire in 1996 showed that it took up to 18 months after services had returned to normal to get those customers back. "We will do our best to add such customers back but it will take time," he said.

Eurostar passengers and the number of cars using Eurotunnel were holding up so far this year despite the recession, he added, with romantic trips to Paris on Valentine's Day at a similar level to last year.

When Eurotunnel was floated on the stockmarket in 1987 to build and operate the Channel link, thousands of ordinary Britons bought shares in the company, entitling them to travel through the tunnel for £1 a trip. The tunnel opened in 1994. About 3,000 of the original shareholders are still able to take advantage of the perk, which many lost in a restructuring.

Precious few other benefits have been available to them. Debts of €9bn as building costs escalated almost sank the company. In 2006 Eurotunnel entered bankruptcy protection after a restructuring deal collapsed. After a massive public relations campaign by the firm, shareholders finally agreed a year later to a rescue that diluted their stake in the business.