Mezeron & Steam Packet Master Thread

[b4mbi]

Looks like the Gov and SP both have different views on the UA.... http://manxradio.com...d.aspx?id=48361

 

"Packet must 'fight for survival'

Published online at 03/11/2010 01:30:32

 

Infrastructure Minister Phil Gawne, MHK

 

The infrastructure minister has told the Steam Packet it can expect no special treatment from government, as it comes to terms with the rival freight service which has been set up by Ramsey based Mezeron, between Douglas and Liverpool.

 

Phil Gawne says there is nothing in the government's user agreement with the company to prevent a container-based freight service out of the capital, and there has always been a possibility one could be started.

 

He says the Steam Packet must fight to ensure its survival, and is confident it can overcome the problems it is facing, following the loss of key freight customers Tesco and Shoprite to the rival operation (play audio file):

 

Steam Packet chief executive Mark Woodward has cliamed the Mezeron freight operation poses a threat to his company's passenger services, and Mezeron is not competing for freight busines on a level playing field. "

 

Not competing on a level playing field???!!!!!!!! hahahaahhaha! Desperate claims. There is NOTHING stopping IOMSPC from starting a lift on / lift off service!!!

 

Plainly their main customers thought they were being royally shafted on freight prices and services. Which IOMSPC needed to do to service debt financing for their flawed business model, the main flaw being the UA which they erroneously thought gave them a freight monopoly.

 

Mr Gawne is right to say IOMSPC should not have any special treatment.

[jimbms]

Looks like the Gov and SP both have different views on the UA.... http://manxradio.com...d.aspx?id=48361

 

"Packet must 'fight for survival'

Published online at 03/11/2010 01:30:32

 

Infrastructure Minister Phil Gawne, MHK

 

The infrastructure minister has told the Steam Packet it can expect no special treatment from government, as it comes to terms with the rival freight service which has been set up by Ramsey based Mezeron, between Douglas and Liverpool.

 

Phil Gawne says there is nothing in the government's user agreement with the company to prevent a container-based freight service out of the capital, and there has always been a possibility one could be started.

 

He says the Steam Packet must fight to ensure its survival, and is confident it can overcome the problems it is facing, following the loss of key freight customers Tesco and Shoprite to the rival operation (play audio file):

 

Steam Packet chief executive Mark Woodward has cliamed the Mezeron freight operation poses a threat to his company's passenger services, and Mezeron is not competing for freight busines on a level playing field. "

 

Roughly translated means "Your on your own Woodward old pal, we have a better offer under the table, so hurry up and go under please so we can make a few bob on this, there's a good boy."

[GD4ELI]

I would let the Racket go bust then write a new UA.

[When Skies Are Grey]

I would let the Racket go bust then write a new UA.

 

That's a little harsh on the staff and the pension holders.....sack the board maybe?!?!?!

[DRIVER]

Have i been asleep for the last twenty years, Mezeron have been shipping containers back to and from the isle of man for the last 20 years,they could not cope with ships that they were using so they chartered a larger one for 12 months.

This proved very successfull so now they have chartered two ships and moved to a port closer to their customers distribution hubs, very good business sense!!!

Did the SP not do the same thing 12 years ago when they bought the Ben my chree ?. and that is the only reason they go into Birkenhead through the winter.

Edited November 4, 2010 by DRIVER

[Andy730]

Have i been asleep for the last twenty years, Mezeron have been shipping containers back to and from the isle of man for the last 20 years,they could not cope with ships that they were using so they chartered a larger one for 12 months.

This proved very successfull so now they have chartered two ships and moved to a port closer to their customers distribution hubs, very good business sense!!!

Did the SP not do the same thing 12 years ago when they bought the Ben my chree ?

 

Agreed, but one important point is missing... 90% of Mezeron was sold, then the Ingeborg Piolt was chartered... etc. etc.

[John Wright]

The real culprit here is the banks and debt financing of purchase and the over inflated value put on the company because it was perceived it had a monopoly under the UA

 

It used to be the case that you could not use the money and assets of a company to purchase its own shares, even to provide security.

 

That got changed and now, like the Glazers and MU and Gillete and LFC, any one who can persuade a bank to loan the money short term to buy the shares can then use the assets as security and re borrow the purchase money via the Company once they are in control so as to repay the original purchase loan, so the new owner does not owe the monmey but the purchased company does.

 

Another flawed Thatcherite deregulatory move, with potentially serious consequences when it goes wrong.

 

And of course there is a potential level playing field, yes the Steam Packet can do lift on lift off. Who is going to carry passengers and cars if they do that and what on? But in reality it is not level, Graylaw, with Mezeron, are using a chartered vessel, a cheap foreign crew, with very low crewing levels (as there are no passengers)and associated overheads, a much slower crossing time and thus less fuel.

 

Don't get me wrong, I am not sympathetic to the SPCo, I am however self intereseted in having the best passenger and car service I can have, frequent and flexible.

 

I have done over 70 single SPCo crossings in the last 12 months since my partner had three brain haemorhages and was air ambulanced to Walton. I did visiting on an alternate day basis to Liverpool for a month in the summer when Walton cocked up and an infection set in. Flying is out for my partner until the new cranioplasty is done this week end, in London. I used the boat because it was cheaper and quicker and more convenient to do that and take the car than fly and hire

[b4mbi]

I would let the Racket go bust then write a new UA.

 

 

Hmm.

Whilst I have little sympathy for their current situation which is largely of their own making, whatever you think of the company, 180 years of continuous service to the Island should not be overlooked so easily.

 

It is difficult to see a way out of the hole they find themselves in having to maintain high margins to service their debt, but having lost a significant revenue stream.

 

Their debt must have been reorganised start October as there are various mortgages and charges registered against the MIOM 1 Ltd group company in the companies registry.

 

Sad as I am, their group accounts for 2010 and in future for 2011 would make very interesting reading. Anyone got a copy they could PM me?!!

 

 

 

 

A good solution would be for the company to be owned locally (vested interest) and run as a not-for-profit organisation (non governmental)

 

This would provide cheapest fares / freight rates possible,whilst ensuring that a vital lifeline for the island is maintained.

 

However finding such an altruistic shareholder may prove difficult!!

 

Anyone want to make this suggestion to Mr Whittaker as his legacy to the Island?

[Tugger]

The real culprit here is the banks and debt financing of purchase and the over inflated value put on the company because it was perceived it had a monopoly under the UA

 

No it isn't. The banks did not force Macquarie to finance the acquisition through debt. It chose to.

 

It used to be the case that you could not use the money and assets of a company to purchase its own shares

 

It was always possible to circumvent this, either through the whitewash procedure or simply by using a subsidiary established in another jurisdiction.

 

That got changed ... Another flawed Thatcherite deregulatory move

 

The major change was introduced by Mr Justice Millett in the Arab Bank case.

 

The User Agreement allows a company to operate that service at a profit, of that I have little doubt. It's just not enough of a profit for the owners. That's not any bank's fault

[Frances]

No it isn't. The banks did not force Macquarie to finance the acquisition through debt. It chose to.

...

The User Agreement allows a company to operate that service at a profit, of that I have little doubt. It's just not enough of a profit for the owners. That's not any bank's fault

Macquarrie appears to have transferred the risk to a pension fund - it took its 30pieces of silver in the transactions and I think an ongoing management fee - it also shafted the Island by imposing the requirement for a too high rate of return (only possible via its now defunct monopoly) and also the choice of an unsuitable boat (too big + too expensive to operate even assuming it could be made reliable - which unreliability seems to have been one reason for its sale) - they also appear have made a profit on this sale - we really need a FoI act to get to the bottom of this whole sorry mess.

[Jimcalagon]

The User Agreement allows a company to operate that service at a profit, of that I have little doubt. It's just not enough of a profit for the owners.

 

 

This is the crux of the matter, in my opinion.

[Guest ravabelli]

I think that Mr Robertshaw's piece last year succinctly explained the problem the Island has with the Steam Packet and its owners. I hope that he and his colleagues stand firm.

Edited November 4, 2010 by ravabelli

[John Wright]

The real culprit here is the banks and debt financing of purchase and the over inflated value put on the company because it was perceived it had a monopoly under the UA

 

No it isn't. The banks did not force Macquarie to finance the acquisition through debt. It chose to.

 

It used to be the case that you could not use the money and assets of a company to purchase its own shares

 

It was always possible to circumvent this, either through the whitewash procedure or simply by using a subsidiary established in another jurisdiction.

 

That got changed ... Another flawed Thatcherite deregulatory move

 

The major change was introduced by Mr Justice Millett in the Arab Bank case.

 

The User Agreement allows a company to operate that service at a profit, of that I have little doubt. It's just not enough of a profit for the owners. That's not any bank's fault

 

Cause and effect? Yes there were ways of whitewashing, but Millett J's judgement was based on differences in the 1985 Company Act as opposed to the 1980 Company Act and the previous Acts going back to 1948, 1929 and the 1800's. Those differences may have been intentional or unintentional, but they happened on Maggies watch. The 1980 act applied to foreign subsidiaries. Millett's judgement only works because the definition was changed in 1985

 

Of course the banks did not force the purchasers to borrow, but previously the MU. LFC and SPCo situation would not have been allowed to occur

 

My understanding of Arab bank is as follows

 

Millett J considered the geographical scope of section 151 of the 1985 Companies Act and concluded that this had been altered during the consolidation of UK companies legislation in 1985. In particular, the 1985 Act went further than the 1980 Companies Act (which was an amending act) and, in interpreting the 1985 provision, Millett J applied the presumption that, in the absence of an express contrary intention, section 151 could not have extra-territorial effect. The difficulty with the 1985 Act provision arose as a result of how the prohibition was framed: in particular, the prohibition applied "to the company or any of its subsidiaries" and "subsidiary", as defined in section 736 of the 1985 Act, includes foreign companies. The prohibition in the Act is restricted to UK public companies and their UK subsidiaries as a result of the definition of "company" in section 1. Subsection (1) of that section makes it clear that, unless the context otherwise requires, "company" means a company which is formed and registered under the Act or a former UK Companies Act. So you can do this with a private company since 1980/85 and of course it is easy to convert a public company into a private one once you have all the shares.

 

I can supply the IOM section equivalent if wanted.

 

The change occured on Thatcher's watch in relation to private Companies in 1980 as a liberalising/deregulating provision. Its consequences were unforeseen

[pongo]

I think that Mr Robertshaw's piece last year succinctly explained the problem the Island has with the Steam Packet and its owners. I hope that he and his colleagues stand firm.

 

Good link. I am sure that the PAG would be happy for it to be quoted here:

 

Why The Steam Packet User Agreement is More a Charter for Customer Abuse

 

It is very simple. The user agreement between the owners of our ferry service and the Isle of Man Government created a de facto monopoly. Once the monopoly was secured the ferry company was sold and sold again as a commodity on the international money markets at an ever higher price at the peak of the financial boom.

 

Borrowed money was used for the latest purchase which created around £200m worth of debt that has to be paid for in interest charges, loan repayments, dividends for the owners and so called management fees. All this before even beginning to consider the genuine costs of running our ferry service such as fuel, staff, vessel maintenance and renewal, insurance and harbour fees etc.

 

Who is paying for all of this? - we all are every time we make a purchase in the shops be it food, clothes, household goods and other necessities or when we travel by ferry which we must do if we wish to take our car off-Island. The awful truth is that the user agreement has directly resulted in us all becoming truly captive customers to an over-expensive product with no choice but to pay and pay again. That's why the buyer so cynically overpaid for the ferry company in the first place - knowing we would have to foot the bill.

 

Perhaps we might hope that this nightmare will come to an end sometime soon - not so - our government has extended the user agreement again and again without any reference whatsoever to the views of the people. These extensions have now taken the user agreement up to 2026.

 

To give some idea of how completely out of balance the ferry company finances are the accounts at the end of 2008 showed around £200m worth of debt whilst the value of the ships and other tangible assets was around a mere £20m. Part of the company's regular propaganda campaign is to constantly direct you to the cost of new vessels but never to the real debt burden - i.e. the debt created as a direct result of the inflated price the owners paid because a monopoly was on offer.

 

In the Second Report of the Select Committee on the Steam Packet Company, one of the owners representatives, a Mr Parsons has the sheer effrontery to blatantly insult the intelligence of the people of the Isle of Man when he said that absent the User Agreement there might not be a ferry service at all !

 

The owners of the ferry company don't want to tell you the truth, the company employees would not be allowed to and the Council of Ministers hope no one will.

 

It is past time more of our politicians had the courage to point to the truth - the user agreement is a rip off.

[Tempus Fugit]

isn't there something in the UA about having to invest £x millions in the fleet, which means that they can't even charter the ships ?

 

hands tied behind their backs too