Groupe Eurotunnel SA announced the early repayment of some of its debt instruments through the issue of new equity because its earnings are ahead of its recovery plan.

The operator of the rail tunnel between France and Britain, after coming close to bankruptcy, had been in prolonged talks with its creditors until a Paris court on January 15, last year approved a debt restructuring deal which gave banks and financial institutions a major part of an increased share capital.

Under that deal it had three years to restructure its share capital and the company, boosted by higher revenues through a rise in traffic, had said last month that it might increase its equity as soon as this year.

Eurotunnel said it was now planning the early cash redemption of some €1.7 billion of the so-called NRS II, notes redeemable in shares.

This would cut financing costs by €68 million per year and "could allow the company to consider the distribution of a first dividend", it said in a statement.

But due to instability in the financial markets, Eurotunnel's board decided to split the equity issue in two. To this end it will issue €800 million in subordinated deferred equity securities (SDES) in the coming days in an operation underwritten and guaranteed by Goldman Sachs.

A second issue of €900 million in share warrants could take place in the spring, executive chairman Jacques Gounon told journalists in a conference call.

Mr Gounon said the operation was designed to avoid a single investor obtaining a blocking minority in the firm. Asked whether there were indications of this he said:

"No, but we are taking our measures to prepare for such an eventuality."

During the Eurotunnel debt crisis, several parties had been willing to buy the assets and run the tunnel and rescue plans had been put forward by Goldman Sachs and Australia's Macquarie Bank and another by Citigroup.

Mr Gounon said the firm's unaudited results to last December showed an EBITDA of €439 million, which was ahead of its recovery plan, while it broke even on a net level.

Groupe Eurotunnel said in a statement its unaudited 2007 results showed total revenues of €775 million and a trading profit of above €275 million.