Eurotunnel panel review threatens Herbert Smith

Herbert Smith is bracing itself for the prospect of losing longstanding client Eurotunnel, as the tunnel operator’s new management conducts a shake-up of its legal and banking advisers.

The firm, whose relationship with Eurotunnel stretches back to the 1980s, met with the company last week as part of a series of talks with bankers and legal counsel.

A Herbert Smith spokes-person said: “We’ve advised Eurotunnel for a number of years and we continue to advise them. That’s all we can say at the moment. It’s obviously quite sensitive.”

It is understood that Eurotunnel has drawn up a short list of potential new legal advisers and will make an announcement this week, but is expected to make fewer changes than first thought. The review has already seen Brunswick and Euro RSCG axed as public relations consultants.

Meanwhile, Lehman Brothers and Lazard Freres are frontrunners as new banking advisers, which already includes Merrill Lynch and Dresdner Klein-wort Wasserstein.

It is understood that Eurotunnel’s management has come under pressure from parties involved in the company’s restructuring to ditch Herbert Smith as legal adviser in favour of a “fresh pair of eyes”. The company owes £6.4bn to its bank lenders.

Eurotunnel declined to comment.