Eurotunnel was privately financed project, and ultimately cost $14.7 billion. The actual funding for the Channel tunnel project occurred at different stages of the project.
The first stage consisted of a number of tranches prior to and just after the commencement of construction. The first tranche (Equity 1) was provided by a consortium of 10 contractors and 5 banks, who put up an initial equity of £47 million. The initial parties negotiated among themselves the construction contract and detailed terms for the credit facilities. The second tranche (Equity 2) was launched in October 1986 and reduced the initial shareholders to minority shareholders. At the same time, a credit agreement was negotiated with 50 banks that underwrote the deal, and syndicated it to over 200 banks. The third tranche of equity was a public issue (Equity 3), which was completed in 1987.
The second stage of financing occurred in November 1990, corresponding to the time of the first tunnel breakthrough. A rights issue (Equity 4) and an additional £2 billion in credit facility was raised, but not without considerable difficulties.
Following the first round of capital raising, it appeared that the cost of tunneling was underestimated, and the actual costs exceeded the budget even taking into account 25% cushion in the budget. Banks had to waive a number of breaches to the credit agreement from mid-1989.
The third stage of financing occurred following the completion of the tunnel. The project obtained an operating certificate from the Intergovernmental Commission (IGC), an authority set up to monitor Eurotunnel's compliance with the concession agreement. There was a rights issue in 1994 (Equity 5), in additional to further borrowing with the introduction of "Senior Debt".
In 1992, Transmanache and Eurotunnel were engaged in a dispute over a claim for addition construction cost of £1.5 billion claimed by Transmanache. The claim was referred to a dispute panel set up under the construction contract, and settled in April 1994. There was also a claim from Eurotunnel Consortium Wagon Group in relation to the additional costs for Le Shuttle wages, which was settled in November 1993.
In September 1995, Eurotunnel announced that it would suspend interest payments for 18 months. This led to negotiations with its lenders and eventually a restructuring plan was agreed in October 1996.