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Post-acquisition review of Eurotunnel


Eurotunnel, post-acquisition review, PPP project

At the time it was constructed, the Eurotunnel, a 50km tunnel that connects England and France under the English Channel, was the largest PPP project in the world.

Our role

As a condition of the first major financial restructuring of Eurotunnel after it failed to meet revenue expectation after its opening, the lending banks appointed a consultant to provide continuous monitoring of the company. Steer Davies Gleave was appointed to this role in 2003 until the role was discontinued in 2007.

Our review covered all aspects of the business including the company's markets, revenue, operating and capital costs, operations and insurance. By allowing access to company's management and carrying out independent research, we were able to interpret the Eurotunnel’s own management reports and provide our own insights to the lenders. Lenders used our reports to develop their own views on the value of their investments and make crucial decisions when Eurotunnel was restructured.

How we did it

Our team’s long history of involvement with Eurotunnel in this role meant that we were able to provide continuity of knowledge and insights and make suggested improvements that influenced management action.

We undertook a multi-faceted role that involved:

  • Reviewing Eurotunnel’s periodic performance reports, business plans and capital expenditure programme to form a view on the influences on the business; identify reasons for any divergence from plan; and assess the reasonableness of their projections of revenue and expenditure.
  • Managing a multi-disciplinary team including an engineering firm and an insurance specialist to provide full commercial and technical advice. 
  • Providing insights into the trends and developments in Eurotunnel’s markets (accompanied freight, car and coach travel across the Channel) as well as those of its customers (Eurostar and rail freight operators) and competitors (the ferries and airlines).
  •  Applying our knowledge of the drivers of the demand in different customer segments, of the cost to deliver different products and of the business economics of competitors, to carry out a critical analysis of Eurotunnel’s strategies and projections.
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