CHANNEL tunnel operator Eurotunnel reached a last-minute agreement with its creditor banks on restructuring its huge debts yesterday, officials said, apparently resolving seven months of crisis negotiations that almost ruined the company.

The deal, details of which were to be finalised last night after it was hammered out in talks following a midnight Monday deadline, would be officially announced by the Commercial Court of Paris this morning, the sources said.

The agreement resolves a crisis that had led to speculation that Eurotunnel would be put under administration, potentially opening the way for another operator to take over management of services through the Channel tunnel.

Eurotunnel has total debts of around 70 billion francs (£8.5 billion) and suspended payment of interest on its main debt of about 62 billion francs last September.

To be effective, the agreement will have to be ratified - probably late this week - by the board of directors of the Franco-British Eurotunnel consortium, and by a pool of the main banks among the company's 225 creditor banks.

Representatives of the 750,000 Eurotunnel shareholders will also be asked to approve the deal, although probably not until an extraordinary general assembly, which is unlikely to be held for several months.

The Commercial Court of Paris had indicated that if the company and its banks failed to agree on a debt restructuring, the tunnel operator might be put into court administration. Financial analysts had said that neither side could afford the huge losses that would arise from failure to do a deal.

Eurotunnel has managed to increase its traffic and share of cross-Channel business, and to break even on operations, but its interest charges are colossal in relation to total revenue.