Realist, not conformist analysis of the latest financial, business and political news

But Why Would It Take 18 Months To Restart Eurostar?

The claims about why the British government – that is, your and my wallets – should subsidise something owned by the French government are getting ever more desperate. The background is that Eurostar is losing a bundle – hey, it’s international travel during a lockdown on international travel. It’s largely owned by the Frogs through their national train operator. They started out by demanding that the British government bail it out. The requests have become politer as it was obvious that that wasn’t going to work. But as they’ve become politer so have the excuses become weaker:

Eurostar has struck a deal with its lenders to refinance hundreds of millions of pounds of debts, paving the way to re-open talks with ministers over financial support from British taxpayers.

OK, so they need less than they did. The first approach having been rebuffed, that’s good. But look at what they’re now saying:

UK support would be made on the basis that if Eurostar collapsed, Britain could left without a rail link under the English Channel for up to two years, insiders added.

Well, yes, if that French government owned company simply shut up shop and walked away then there could be a gap in the service.

And yet that’s not how corporate bankruptcies happen, is it? An administrator in bankruptcy is appointed. Whose task is to maximise the returns from the assets in favour of all investors – both equity and debt although with different emphases.

So, a tunnel or train services that is still operating has more value than one where they’ve all just walked away? Clearly, the still operating service has more value. So, the service, even given the bankruptcy of the current legal wrapper of it will continue to operate.

Sure, it might well take 18 months to get a new company in there, feet under the table, fully capitalised and all tickety boo. But the idea that corporate bankruptcy means the immediate liquidation of the service is nonsense. As all involved do actually know as well.

Sure, they’re asking for less money now but the excuses are getting ever weaker too. Paris should cough up to protect their own investment and if they don’t then sell it off – through the administrator – to the highest bidder. Job done.

After all, we have been here before. The tunnel itself went bust and they didn’t go fill it in again, did they?

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decnine
decnine
25 days ago

Maybe administrators do things differently in France?

Esteban
Esteban
24 days ago

If this is anything like every gov’t train project in the U.S. the cost will ultimately be 3-10 times what they’re claiming.

Quentin Vole
Quentin Vole
24 days ago
Reply to  Esteban

See also: HS2.

Spike
Spike
24 days ago

As with the 2008 mortgage “meltdown” and many “crises” since—The alternative to gov’t activism is claimed to be perfect vacuum.

Barks
Barks
24 days ago
Reply to  Spike

The apocalypse is always a zero-sum situation.

Boganboy
Boganboy
24 days ago

Consider the advantages. The UK is then cut off from Europe. Some old WW2 destroyers to sink the illegal immigrants, and most of Britains’ problems are solved.

Addolff
Addolff
24 days ago
Reply to  Boganboy

“The UK is then cut off from Europe”. Sorry Boganboy, you’ve got it the wrong way round old chap: “Fog in Channel – Continent Cut Off”.

Michael van der Riet
Michael van der Riet
24 days ago

If it’s losing money on operations, it’s doubtful that it has more value as a going concern. In my experience with startups and turnarounds, often the best option is to weld the doors closed.

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