EUROSTAR has announced it has reached a £250m refinancing agreement with its shareholders and banks helping the embattled cross-Channel operator to avoid a looming credit crunch.

The financing comprises £50m shareholder equity, £150m shareholder guaranteed loans and £50m from restructuring existing loan facilities provided by lenders including Export Development Canada, Barclays, Credit Agricole Corporate and Investment Bank, Société Générale, Natwest and BNP Paribas.

The loans have been backed by majority shareholder French National Railways (SNCF) (55%), Caisse de dépôt et placement du Québec (CDPQ) and Hermes Infrastructure (40%), and Belgian National Railways (SNCB) (5%).

“Everyone at Eurostar is encouraged by this strong show of support from our shareholders and banks which will allow us to continue to provide this important service for passengers,” says Eurostar chief executive, Mr Jacques Damas. “The refinancing agreement is the key factor enabling us to increase our services as the situation with the pandemic starts to improve.

“Eurostar will continue to work closely with governments to move towards a safe easing of travel restrictions and streamlining of border processes to allow passengers to travel safely and seamlessly. Their co-ordinated actions and decisions are crucial to the restoring of demand and the financial recovery of our business.”

Eurostar says its services from Britain to Paris, Brussels and Amsterdam have experienced a more severe drop in demand “than any other European train operator or competitor airline.” The Financial Times previously reported that the operator was losing around £500m a year due to the Covid-19 pandemic with an average occupancy of around 5% since the start of the pandemic in March 2020.

Britain’s secretary of state for transport, Mr Grant Shapps, had previously dashed hopes for a British-led financial rescue package when he told the House of Commons Transport Committee that Eurostar is “not our company to rescue.”

The operator says the focus will now be on restoring demand for travel on its core routes, and on maintaining rigorous cost control to ensure the repayment of loans.

Eurostar will increase the number of trains between London and Paris to two daily return services from May 27, and three per day from the end of June with a view to gradually increasing the frequency over the summer period as travel restrictions ease.

The refinancing will also allow Eurostar to complete its merger with French-Belgian high-speed operator Thalys, as part of the Green Speed project.