THE Anglo French company, Eurotunnel, indicated it could go into receivership if there were no breakthrough with its bankers on a debt pact by the end of July.

French co-chairman Mr Patrick Ponsolle told investors at a rowdy annual shareholders meeting in Paris: "If we don't reach an agreement by the end of July, then we never will.

Talks between the operator of the Channel Tunnel and bankers have advanced painfully since it froze interest on £8 billion sterling of debt last September. It has sought two court appointed mediators to help in the financial restructuring.

Mr Ponsolle said he would be very surprised" if a Paris judge refused to extend a mandate of the mediators, Lord Wakcham of Britain and Mr Robert Badinter of France, to July 31st as the company had requested.

If the company were put into receivership there were no precedents for working under conflicting French and British insolvency procedures, he said. The debt talks were "complicated, long and extremely difficult". he reiterated.

Mr Ponsolle said Eurotunnel would be prepared to offer some of its equity capital to lender banks in exchange for a large reduction in interest charges.

"If the syndicate banks agree to give us a substantial reduction, very substantial, in charges, we would be ready to accept that they could have some of the capital," he said.

He said he could not tell shareholders what position the company was in its negotiations but admitted that there was a tacit agreement that some debt would converted into shares in exchange for a deep cut in lending charges.

Other areas of agreement included the cutting of debt in coming years and giving shareholders a measure of protection against a dilution of their investment, he said.

A debt/equity swap has been widely expected but the share price for the conversion and the scale of the exchange have been disputed by shareholders who fear a massive dilution.

"Our objective is that a clear majority remains in the hands of the shareholders," Mr Ponsolle said.