Restructuring & Reorganization
Selected Transactions

July 2006

Company Description
MBIA, Inc. (“MBIA” or the “Company”) is a leading provider of financial guarantee insurance and other services to public and structured finance clients worldwide.

Eurotunnel plc (“Eurotunnel”) constructed and operates the Channel Tunnel connecting England and France. In addition to managing the infrastructure of the Channel Tunnel, Eurotunnel operates truck and passenger shuttles.

Situation Overview
MBIA guaranteed substantial amounts of debt issued by two special purpose vehicles that are, in turn, dependent on Eurotunnel debt for payment of interest and principal.  Consequently, MBIA indirectly controlled a substantial portion of Eurotunnel’s debt, an interest exceeding £1 billion.  Eurotunnel was substantially over-levered, with approximately £6.2 billion of indebtedness, or more than 23.5x 2007E EBITDA. Due in part to a prior restructuring, Eurotunnel’s capital structure and inter-creditor relationships had become increasingly complex.  Competition from low-cost airlines and cross-channel ferries as well as the loss of Cross-Channel duty-free status had negatively impacted Eurotunnel earnings.  In response to these factors, Eurotunnel unveiled restructuring plans, creating a complex negotiating dynamic for the various stakeholders.

Transaction Summary
Blackstone was retained as MBIA’s financial advisor and was involved in all aspects of MBIA’s strategy with respect to the Eurotunnel restructuring.  Initially, Blackstone developed a detailed restructuring model for the MBIA backed special purpose vehicles that then formed the basis for negotiation with various constituencies and evaluation of strategic alternatives. Additionally, Blackstone developed a detailed operating and restructuring model for Eurotunnel that allowed MBIA to form conclusions regarding valuation and debt capacity, and evaluate various capital structures upon emergence from reorganization.  Throughout the transaction, Blackstone worked alongside the Ad Hoc Creditor Group’s financial advisors and MBIA’s legal advisors to develop a joint negotiating strategy.  Throughout the process, Blackstone served as MBIA’s liaison with the committee.

With Blackstone’s assistance, Eurotunnel’s restructuring plan was approved by creditors, bondholders, shareholders and the Paris Commercial Court in May 2007. 

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