Impaled on Morton's Fork
OVER at Eurotunnel, Sir Alastair Morton has been working on these principles, and can be said to have taken them further. Six months ago he stopped paying interest on the company's £9 billion of debt — but he cannot stop the interest compounding, nor can Eurotunnel run fast enough to catch it up. By comparison, digging the tunnel was easy. It was after the Queen and her Rolls- Royce had shuttled through that the real trouble started. The rolling-stock was delayed, the designs were unproven, the- health and safety enthusiasts put their oars in, and the tunnel just sat there, earning nothing, while the interest piled up. That was time lost and money lost and neither can now be regained. The tunnel is an engi- neering triumph that still needs to be man- aged for its customers. On one snowy day in February, when Eurotunnel should have had the ferries at its mercy, the signs went up: 'Channel Tunnel closed.' The staff, apparently, had not been able to get in. Managing the debt is something else. Some of that £9 billion will have to turn into risk capital and wait for its rewards until the company can earn them. This is the poker game that Sir Alastair is left to play on his shareholders' behalf. Buried under that mountain of debt there are, as he says, the makings of a good business and an interna- tional concession with 57 years to go. I foresee that before its time is up, the twin governments will complain that Eurotunnel makes too much easy money for its share- holders — but who these shareholders will be my crystal ball cannot inform me.
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