English Channel Tunnel leaks stock takes dive

September 27, 1994|By New York Times News Service

LONDON -- The Channel Tunnel is leaking, and as usual it is the investors in the project who are getting soaked.

Shares in Eurotunnel, the company that operates the 31-mile undersea link between Britain and France, plunged yesterday after news reports over the weekend that water was seeping into the tunnel and not draining properly.

After dropping nearly 10 percent early in the day, Eurotunnel units -- representing one share in each of the French and British divisions of the company -- recovered somewhat but still closed in London at a record low of 250 pence ($3.95), down 19 pence, or 7 percent, for the day.

Eurotunnel, which is planning to begin regular passenger services in November and is already running a freight service, said the water problem was extremely minor and posed no operating or safety problems. The amount of water in the tunnel, Eurotunnel said, was along the lines of puddles, not floods.

The tunnel is bored through rock hundreds of feet below the seabed, and any water coming in from the outside comes from naturally occurring deposits in the rock, the company said, not from the sea above it.

The tunnel is designed to allow a certain amount of seepage to keep outside pressure from building up, the company said, adding that some of the water may also have come from the cooling system, from rain water running off the trains passing through or from cleaning operations.

But even if concern about the leaks was largely a product of the British news media's penchant for seizing on the project's every problem, it quickly became another public relations nightmare for the company.

Eurotunnel has been losing credibility with investors for some time.

The project's final cost of around $15 billion was twice the original budget. Promises that the company would pay a dividend by next year have given way to projections that dividends will begin in 2004. The traffic and fare assumptions that underlie the company's forecast of reaching profitability in 2002 are viewed skeptically by many analysts.

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