Eurotunnel Builders Face 40% Cost Rise

Directors of the effort to build a tunnel under the English Channel said today they will have to dig for more funds to meet a 40% increase in the estimated cost of linking Britain and France by rail in 1993.

The Anglo-French Eurotunnel consortium said it now puts the cost of the project at about $11.3 billion, up from the $8.1 billion originally forecast.

The project has been hit by inflation, construction delays and the increased cost of components such as rolling stock.

Eurotunnel said it plans to raise about 75% of any additional funding from the syndicate of international banks that has committed funds to the project. The remainder will probably come from a rights issue in 1990 or 1991.

But the consortium said disagreement over estimated construction costs with contractor Transmanch-Link, a consortium of Anglo-French companies building the tunnel, is making it hard to finalize a financing package.

“Consequently it has not been possible to determine with Eurotunnel’s syndicate of banks an acceptable forecast of costs to complete the project which can be used as a basis for arranging the necessary additional funding,” the consortium said in a statement.

Eurotunnel shares dipped $1.46 on the London stock exchange this morning to $9.80.

The project, due to be completed by June, 1993, is for three tunnels, two for rail traffic and a third for maintenance. The 31-mile link under the channel is expected to cut the rail journey time from London to Paris from the current six hours to 2 1/2 hours.