PARIS - French corporate governance is taking two more giant steps forward.
In the first-ever proxy solicitation conducted in France, Eurotunnel PLC shareholders will be asked to hand their proxies to an outside agent.
Separately, minority shareholders in Compagnie d'Investissements de Paris won a significant victory, getting Banque Nationale de Paris to swap their shares for stock in the bank.
In Eurotunnel, the aim of the proxy solicitation to 600,000 individual French shareholders and 150,000 U.K. individual investors will be to give Eurotunnel management sufficient leverage to contend with its consortium of banks, said Sophie L'Helias, president of Franklin Global Investor Services, Paris.
For French shareholders, who typically don't vote their shares, casting their proxies is a big deal, Ms. L'Helias explained. She declined to reveal her strategy for the June 27 annual meeting.
Eurotunnel's shares are about 90% owned by individuals. Franklin has been hired by two Eurotunnel shareholder groups to conduct the solicitation.
Eurotunnel, which announced in September that it could no longer pay interest on its 8.4 billion in debt, has been trying to work out a deal with its 225 bank lenders.
A leaked plan suggested the banks would swap an estimated 2.5 billion to 3.5 billion for nearly half of the company's stock. But there is opposition to the plan from banks and investors, who already have experienced huge losses in their share value and oppose any further dilution.
In the second case, Banque Nationale de Paris owns directly or indirectly 83.9% of the shares in CIP, a publicly traded pooled fund, but controls 93% of the voting rights.
Last year, with the help of Ms. L'Helias, New York hedge fund manager Elliott Associates L.P. led a charge to get the bank to bail out its deeply discounted shares in the fund, which is invested in French publicly traded companies.
Elliott was the first institutional investor to file a proxy resolution in France. It called on the bank to increase CIP's dividends; transform the pool into a SICAV - a mutual-fund type vehicle - so investors could redeem their holdings; have the bank buy back the shares at least 95% of their net asset value; or take action to reduce the heavy discount on the CIP shares.
The bank, however, refused to budge.
This year, facing the threat of a proxy resolution from shareholder SBC Warburg at its May 29 annual meeting, BNP offered to swap shares in CIP on a one-to-one basis for shares in the bank's own stock.
That means a 30% boost for CIP shareholders, since CIP shares traded at 150.5 francs and BNP shares at 195 francs at the time of the announcement.
A statement from BNP said the stock swap would increase the value and liquidity of CIP shareholders.