Eurotunnel has signed a memorandum of understanding with its major creditors handing them control of the company, it was claimed last night.
The deal needs the approval of the group's 800,000 French shareholders, but would - if creditors fully exercised their rights to exchange debt for equity - leave them with less than 30 per cent of the business.
But the terms compare very favourably with recent precedent, with shareholders left with five per cent or less in similar debt write-off deals such as at Jarvis and Telewest.
The deal proposes to write off nearly half the company's £6.2 billion of debt, leaving £3.5 billion. There is also said to be the option to convert a further £1 billion into shares.
Founded in 1987, Eurotunnel's debt problems stem back to the crippling cost of digging the Channel tunnel - it quickly emerged after opening in 1994 that it was not making enough cash from users to service debt payments.
In its third revamp in ten years, the company announced earlier this month that it had reached an agreement with creditors representing over half its total debt.