Fletcher Oklahoma

So another test of the one-size-fits-all monetary policy is about to come up. But other parts of the eurozone that have up to now performed better than Germany appear less well positioned to cope with the strains of more expensive money. The only issue is whether the European Central Bank will increase rates by a quarter or a half of a percentage point when it next moves, most probably at the next meeting on 8 June. The German economy is perking up at last - just in time for higher interest rates in Europe. Manufacturing investment posted a 7 per cent rise on the quarter after negative or flat growth in four of the previous five quarters On an annual basis, it was up 12.4 per cent.. Yesterday, figures showed German business confidence remained close to a 15-year high this month.

However, the CBI's total new orders balance fell to minus 12 from minus 11 per cent.Separately, the Office for National Statistics said business investment rose 1.7 per cent, leaving it up 2.8 per cent on the same period a year ago - both the strongest results since the third quarter of 2004. The rebound from a balance of minus 13 per cent in April was driven by renewed demand for capital goods such as industrial engines and aerospace equipment.Analysts said it was further evidence the UK was benefiting from a rebound in the eurozone economy. A revision to 0.7 per cent from an initial estimate of 0.6 per cent would revive speculation the next move in interest rates will be up.The CBI said its survey of 700 firms found that, for the first time since February 1996, as many firms said export orders were above normal as below. The number of manufacturers reporting a rise in overseas sales hit its highest level for a decade last month, while business investment rebounded in the first three months of the year. A 1.7 per cent surge in investment - thanks to a 7 per cent rise by manufacturers - could be enough to prompt government statisticians to revise first-quarter GDP growth today. Hopes of the long-awaited rebalancing of the UK economy were given a double boost yesterday from figures showing a surge in factory export orders and manufacturing investment. The Eurotunnel chairman, Jacques Gounon, initially said there would be no dilution for existing shareholders, and there is a possibility that Nicolas Miguet, the rebel investor who forced out the previous board, could yet lead another shareholder revolt.But one creditor said: "It is a question of whether shareholders want 100 per cent of a cake which is worth nothing or a smaller share of a cake which will be able to pay a dividend.".

The bondholders control £1.9bn of Eurotunnel debt and are pressing to be bought out at par, but Eurotunnel argues that many of them bought in at a fraction of the bonds' face value.In order for shareholders to approve the restructuring, 25 per cent by value have to vote and the vote has to be 75 per cent in favour. However, a source in the creditors' camp said: "If you think of this as the 4x400 relay in the Olympics, then the baton has just changed hands for the first time. Much hard work remains to be done."Eurotunnel said it had signed the binding agreement with the ad hoc committee, which represents just over 70 per cent of its debt and is comprised of the European Investment Bank, Franklin Mutual Advisers, Ambac, MBIA and Oaktree Capital Management.It said that discussions would now continue with other lenders, including bondholders. However, the agreement still has to be approved by junior bondholders and shareholders before it can be put into effect, and Eurotunnel also has to arrange financing from Goldman Sachs and Macquarie, who between them are putting up £1bn of hybrid debt convertible into shares in three years time. Eurotunnel said that it was seeking permission to postpone its annual general meeting from 30 June to 12 July to allow it to hammer out a deal and to give shareholders sufficient time to consider the restructuring before voting on it.The financial restructuring will give Eurotunnel an enterprise value of about £4bn - of which £3bn will be in the form of senior and mezzanine debt and £1bn will be shared by bondholders, shareholders and those who subscribe to the convertible note being issued by Macquarie and Goldman's.Eurotunnel is still hopeful that an outline agreement with all its creditors can be announced before the end of this month.