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Eurostar reaches refinancing deal with lenders

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Suban Abdulla
·3-min read
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A Eurostar e320 train, the latest train the Eurostar fleet, passes through Ashford, Kent. (Photo by Gareth Fuller/PA Images via Getty Images)
The channel tunnel operator has been left fighting for survival over the past year amid an ever-changing set of travel policies and widespread coronavirus lockdowns. Photo: Gareth Fuller/PA Images via Getty Images

Eurostar is said to have secured a deal with its lenders to refinance a debt pile worth £400m ($553m) as it looks to secure financial backing from the UK government. 

A group of banks, including Natwest (NWG.L), have agreed to refinance the loans that were due to be repaid this summer, the Telegraph reported. 

So far, it has received millions in funding from lenders such as Santander (SAN.MC) and France's Credit Agricole (ACA.PA). 

Shareholders at the company are ready to do the "heavy lifting" by providing fresh capital for the company, according to the newspaper. 

Despite that the Channel tunnel operator hopes to get UK state aid to help ensure its long-term future as Britain risks losing the rail link for two years if Eurostar collapses. 

However, the UK government has previously pushed back against British taxpayer support for the firm. 

In February, transport secretary Grant Shapps told ministers that the government is "very keen for Eurostar to survive" but insisted "it’s not our company." He added that "things like UK export finance" could be an option for the company.

The channel tunnel operator has been left fighting for survival over the past year amid an ever-changing set of travel policies and widespread coronavirus lockdowns. 

In January, the company warned it is in a “very critical” state and on track for financial ruin.

The coronavirus pandemic has hit all forms of public transport systems and the global travel industries. This has lead to the operator's passenger numbers plummeting 95% since March 2020 from the previous year.

At the moment it is running just one train in each direction between London and Paris. It operated more than 50 daily services before pre-pandemic, and two trains an hour during peak times.

Eurostar had not come back to Yahoo Finance's request for comment at the time of publishing. 

READ MORE: Pension giant joins calls for Eurostar bailout

Eurostar was snubbed by the Treasury in November when it had announced subsidies to major airports of up to £8m each.

At the time the train operator said: “The new scheme of rates relief for airports puts Eurostar at a direct disadvantage against its airline competitors.

“Eurostar has been left fighting for its survival against a 95% drop in demand, whilst aviation has received over £1.8bn in support through loans, tax deferrals and financing.”

The company which was founded in 1994, has been credited with reducing carbon emissions. Since it started the services, air travel between London and Paris has more than halved.

In 2015, Britain sold its stake in the operator to France for £750m. The French government has pumped €200m (£178m) into Eurostar to keep it afloat during the crisis.

The French state rail firm Société nationale des chemins de fer français (SNCF) owns 60% of the firm.

The company which was founded in 1994, has been credited with reducing carbon emissions. Since it started the services, air travel between London and Paris has more than halved.

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