UK government takes tough line on bailout requests for Eurostar

The government of Prime Minister Boris Johnson is resisting requests for a UK bailout of struggling train operator Eurostar, with ministers insisting that the company should look to its shareholders to ease its plight.

Eurostar is at risk of bankruptcy following a collapse in revenue after passenger numbers plunged during the pandemic.

UK ministers are said to be taking a tough line. One UK official briefed on the situation said: “The tunnel and the rolling stock are there. Someone would take them on, even if the company went to the wall. There’s no appetite for bailing them out at all.”

Chancellor Rishi Sunak announced in May 2020 a scheme called Project Birch to help strategically important companies but only where “viable companies have exhausted all options”.

Eurostar has £400m loans that are due by June, although they can be extended, say people familiar with the matter. The company called for rescue funds from the UK government in January, when it said there had been a 95 per cent decline in passenger numbers since March 2020. 

But the UK government has maintained that the French state and private shareholders should be primarily responsible for any rescue, with both France and the UK reluctant to move first and lose negotiating power.

The UK sold its stake in Eurostar in 2015, leaving the French government with a majority 55 per cent stake via the state-owned railway SNCF, and Belgium 5 per cent. 

A senior official in Paris said the French government expected shareholders and creditors to make an additional effort before any state aid could be put on the table.

The official added that a solution for Eurostar would have to be found by this summer, and that as it stands France still expects the UK to participate if needed but there had been no high-level political contacts with the British so far.

Shareholders, including the Canadian pension fund Caisse de dépôt et placement du Québec and Hermes Infrastructure have already put in more than €200m during the crisis. 

SNCF told the Financial Times in March that Eurostar will need new money in “weeks not months” to fend off a looming cash crunch and that both the French and UK governments were in advanced discussions about how to help the company. 

Eurostar and the UK government have held talks over a possible state-backed commercial loan worth £60m to help it through the crisis, but they are yet to yield any results. One person close to the talks said the discussions had not concluded, and there has not yet been a definitive refusal from the government. 

Eurostar owns and runs the trains that travel on high-speed lines between the UK and France, Belgium and the Netherlands but does not own any of the infrastructure it uses, including the Channel Tunnel itself. 

Its chief executive Jacques Damas told the FT last month he was “fed up” with the French and UK governments’ refusal to take responsibility for helping the company. 

Eurostar and shareholders SNCF, Hermes and CDPQ declined to comment.

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