Mezeron & Steam Packet Master Thread

[manxfriend]

Times have changed and this shake up should be a chance for all parties to sit down and re-write the user agreement to the benefit of all parties (Islanders / SPC / Gov) and for the SPC to look at their charging strategies, with smaller profit margins.

It's not as simple as that now as the SPCo have now been shown up as extremely vulnerable to even a slight fall in sales/profits. Is it a sound long term service provider to the island? With the exorbitant debt that they are carrying, I wouldn't bet on it. Maybe, as Bill Malarkey intimated, it's time to address the issue once and for all and fix up a long term strategy with (or without) the SPCo....

 

I agree- if the long term debt they are carrying is true – they are vulnerable and not just to competion, but to financial difficulties. But what is this debt? If they had a YE 08 turnover of £55m and made a profit of £9m (paid £17m dividends so resulted in loss of £8) then surely these accounts have taken the debt into account within the long or short term liabilities? Or am I missing the debt/liability in the accounts? These are the last accounts filed at companies’ house, so I can’t read them for YE 09 yet.

Have you read any of the other postings?

 

Ok - let me explain.

 

The debt does not sit with IOMSPC - it sits with another company further up the structure called MIOM Limited. The lender is Banco Espinto Santo de Investimento SA ("BESI") (which, FYI, is NOT part of the MacQuarie group). BESI has legal charges registered over both the Ben and Manannan. It is worth noting that, according to documents filed with the Companies Registry, the Mananna is mortgaged 100% by BESI.

 

IOMSPC therefore does not pay the cost of any interest/ loan repayments, nor do these show in the accounts. The dividends are paid upstream to MIOM who then services the interest payment on the debt, and passes (any) leftover profit upstream.

 

From the select committee findings, it would appear that the loan interest repayments themselves are circa £10million per annum. The loans are 'interest only', therefore at the moment no capital is being repaid.

 

This information is all the the public domain, in the form of the select committee reports and company registry filings.

[manxfriend]

Thank you for eloquently clearing that up, SPC have no debts that they can’t currently repay, however an associated company MIOM has debts that they have secured with some shareholding/ownership of the SPC. Worst case scenario from this – the SPC gets sold to settle the debt – even if there is a shortfall in the sale cost the SPC don’t pay it as they are a separate legal entity from its ultimate owner who again is a limited company in its own right.

[gazza]

Thank you for eloquently clearing that up, SPC have no debts that they can’t currently repay, however an associated company MIOM has debts that they have secured with some shareholding/ownership of the SPC. Worst case scenario from this – the SPC gets sold to settle the debt – even if there is a shortfall in the sale cost the SPC don’t pay it as they are a separate legal entity from its ultimate owner who again is a limited company in its own right.

 

that may not be a worse case scenario that could be a good thing

[manxfriend]

Thank you for eloquently clearing that up, SPC have no debts that they can’t currently repay, however an associated company MIOM has debts that they have secured with some shareholding/ownership of the SPC. Worst case scenario from this – the SPC gets sold to settle the debt – even if there is a shortfall in the sale cost the SPC don’t pay it as they are a separate legal entity from its ultimate owner who again is a limited company in its own right.

 

that may not be a worse case scenario that could be a good thing

[manxfriend]

New owner is in my opinion 'best and worst case' scenario, and possibly the most postive way forward for all.

Edited November 10, 2010 by manxfriend

[jack bauer's brother]

Having travelled on the BEN today and actually spoke to quite a few of their guys(mind open )

the folk i spoke too are not only profesional IMHO but after running a mock excercise which seemed for their own benefit but also shore based personel,im thinking i feel really safe with these people,upon arrival in douglas i find myself having to return to the mainland tomorrow (which im not happy about)but SP are saying their sailings are cancelled tomorrow/or severe disruption,looking at the revised weather forcast im not surprised..............i really need to be on the mainland tomorrow and so booked a flight with flybe for 2 people and find myserlf forking out £156 plus taxis at both ends (one way) in my humble opinion with only 2 ways to get off our little rock the ole SP RACKET dont seem so bad IF this outfit where to disappear from our shorelines i for one would really really miss them.

[lazybones]

does the steam packet make 30 % profit so it can pay off a dept,right then if spc goes bust someone else will come in and make that profit, is that not the nature of business

[Fulltide]

thayallpissintuthesaympotbutthdraynigiscruckedandneedssortingyouallflyoutofthesameerrportferplaytoomezeronnotshureifitwillwerkbutatleestitisanopshun.

 

hapeedaze

[acorn]

We speak of charter on a long term basis not as and when required such as TT. This was covered in my post. It might help if the Steampacket could charter bare-boat which is like a lease and means you do not have to buy. This might relieve capital and yet retain essential IOM services.

 

Look what happens when iomtoday.co.im stops allowing comments; its long term resident nutjob / loony / writer of long boring diatribes that nobody is interested in immediately registers here. Nobody is interested in your whack-job theories Barrie. There's enough angry nutters on here already and most of them actually live here. You don't so why don't you just sod off? You could call that protocol 4; the right of the Manx people to passport boring nutters throughout Europe.

 

 

Doesn't the looney even live here? Dear me, he's even sadder than I thought.

[acorn]

Traditionally sailing times were recorded from the The Rock to Douglas head. The Rock being near enough off New Brighton lighthouse at the mouth of the Mersey, Douglas Head being self explanatory.

 

One thing is for sure Frances, you may well be a, self appointed, expert on all things Manx, snag is you're an English comeover and don't know it all.

in A W Moore 1897 speed run Empress Queen - Mean Speed, Bar to Douglas Head, 22.85 knots,

likewise for sea trials of the 1910 Snaefell

 

and I did phrase it as a question - however I will bow to your better knowledge - maybe you could give a ref or two so I can correct my ignorance

 

 

 

There's any amount of literature available on the Steam Packet, may I suggest you read some of it, or go to the Manx Museum and dig out the SP logs there, you'll find frequent mention of the 'Rock'. As for me? My grandfather was not only a Manxman but a seaman too, amongst other employers, he had several stints with the SP, apart from the books and logs read, I have the benefit of knowledge passed on from someone actually doing the job and being there. Incidentally you appear to place great importance on verification by writers, how did the various authors gain their knowledge? Research obviously but also talking to people with real life experience. Think about it.

 

To be fair Frances of the many self appointed, English/assorted Comeover, Manx 'experts' you are far from being the most irritating. At least you appear to have studied the Island seriously, your usual comment reflects your genuine interest and accumulated knowledge too. You chose the island as your hobby but it could, just as easily, have been Jersey, Anglesey or Rockall for that matter. I've no doubt that whichever island you decided upon, it's history would have been subjected to your obvious intellectual rigour. So far as I'm concerned you're most welcome here, there's no suggestiom of 'boat in the morning' in this comment. However despite your learned knowledge of our island you'll never 'get' what being Manx means. Same as I could never 'get' Warrington, no matter how much I may read up on the town.

Edited November 11, 2010 by acorn

[gilf_uk]

I suspect Gov have already a contingency plan as to what vessels that could operate in Douglas etc and would be available within a relatively short period to take over from a bankrupt SP.

 

You would suspect wrong (thats far too sensible). Our chief minister categorically said late last year in Tynwald that they did not have a contingency plan or indeed that one was necessary, although they did know 'where to go'. I found it incredible that, given the ferry is our 'life line', they have no back-up plan, budget, procedure in place.

 

The Chief Minister:

 

""Mr President, in the very, very unlikely scenario that might happen, no, we do not have a contingency plan, except that we know where to go to get the assistance required. I have to say, in most cases that is freight, which is actually quite easy to pick up, because, of course, freight is a very profitable business. The difficulty may well result in our passenger services, and that in itself, hopefully, would be short term. But I have to say that I think the Isle of Man Steam Packet Company, through all the difficulties over the century and a bit, have actually served this Island very well, and I think it would be much better if we actually took a positive and supportive attitude to what they do, Several Members: Hear, hear.) whilst accepting there are occasions when we criticise what they do, to ensure that we continue to have and enjoy daily services, sir.""

 

http://www.tynwald.org.im/papers/hansards/2009-2010/th20102009.pdf (Page 15).

 

edited to correct wording as it didn't make sense!

Edited November 11, 2010 by gilf_uk

[gilf_uk]

So the reserves have gone from £23.9 million in 2007 to £7.7 million at the end of 2008. Wonder what the position is now? Presumably can't continue to keep paying big dividends if there are limited reserves?

 

From the Hansard report of the Select Committee hearing, June 2009:

 

The Chairman:

If I could ask now, the continuing payment of a dividend which exceeds profits earned in the year depletes the shareholder reserves: was a similar level of dividend paid for the year 2008, and is the Company intending to continue with this policy? I think essentially you have answered that, but nonetheless, just for the record.

Mr Woodward:

I think, again, if I may refer to an answer we gave previously: in 2008, due to high fuel costs, capital expenditure, notwithstanding the Mannanan projects, as well as other capital expenditure, and lower passenger, vehicle and freight volumes, there was less cash available for distribution and therefore shareholders received no dividends.

Similarly, due to lower volumes experienced in the current challenging economic environment, we forecast no dividends to be paid in 2009.

 

He must be confusing his years because dividends of £17.9m went through the 2008 accounts. I presume they are in respect of earlier years' profits.

 

MW doesn't consider the money which is paid upsteam to service the debt as dividendends, and I think what he is referring to is any dividend paid from MIOM to the ultimate owners. Money always moves upstream to MIOM from SPCO to service the debt, but I understand there has been no dividend paid from MIOM to the ultimate shareholders since 2008.

 

It was very confusing for the select committee, who, in the report, compare two sets of figures, using turnover from one company and profit from another - it took me ages to work out how they were calculating their percentages!

[gilf_uk]

Having travelled on the BEN today and actually spoke to quite a few of their guys(mind open )

the folk i spoke too are not only profesional IMHO but after running a mock excercise which seemed for their own benefit but also shore based personel,im thinking i feel really safe with these people,upon arrival in douglas i find myself having to return to the mainland tomorrow (which im not happy about)but SP are saying their sailings are cancelled tomorrow/or severe disruption,looking at the revised weather forcast im not surprised..............i really need to be on the mainland tomorrow and so booked a flight with flybe for 2 people and find myserlf forking out £156 plus taxis at both ends (one way) in my humble opinion with only 2 ways to get off our little rock the ole SP RACKET dont seem so bad IF this outfit where to disappear from our shorelines i for one would really really miss them.

 

You pay more for a flight when you book it closer to the date of departure - thats how travel works.

 

If you were to book your car + 2 passengers onto the ferry for the next available sailing 19:45 on Friday it would be £160.36 + credit card fee. 2 foot passengers would be £76.50 + credit card fee + train from Heysham (if there is one?) or taxi to your destination/ transport hub. The journey would also take up to 5 hours (based on arrival time/ getting off the boat).

 

Flying is always going to be a premium, as it is quicker and in many ways more convienient.

[gilf_uk]

Thank you for eloquently clearing that up, SPC have no debts that they cant currently repay, however an associated company MIOM has debts that they have secured with some shareholding/ownership of the SPC. Worst case scenario from this the SPC gets sold to settle the debt even if there is a shortfall in the sale cost the SPC dont pay it as they are a separate legal entity from its ultimate owner who again is a limited company in its own right.

No problem - it wasn't supposed to sound patronising, so apologies if it did.

 

And yes - completely agree - SPCO is an asset of MIOM in reality - so if MIOM is not able to service its debt, the lender will take control and then sell the asset to recoup as much as possible. it's not going to do something (i.e. remove the boats from service) which will destroy any value which is left and thus and chance of recouping at least some of it's money lent. SPCO is a cash generating business with a profitable trading company within a heavily geared and debt laiden business.

 

As I said, we will still be sailing with the SPCo, just not necessarily a SPCO with the same owner and enormous debt around it's neck.

 

Banks taking control of entitys in 'debt for equity' swaps have happened a lot over the last few years, and will continue to do so.

 

I've also founds 2 high profile cases of MacQuarie Bank investments where they have been highly geared, like SPCO, and then missed loan repayments, and then have been taken over my their creditors - Macquarie would appear to be in trouble!:

 

http://www.businessweek.com/news/2010-10-22/lloyds-rbs-win-appeal-over-european-directories-plan.html

http://news.alibaba.com/article/detail/markets/100182229-1-macquarie-media-warns-debt-problem.html

http://news.smh.com.au/breaking-news-business/southern-cross-media-posts-827m-loss-20100831-148vu.html

 

Examples:

 

Kauphing & Mosaic : http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5683386.ece

BOS & Wyevale: http://www.heraldscotland.com/bank-of-scotland-takes-control-of-wyevale-chain-1.903728

HBOS & Crest Nicholson: http://www.propertyweek.com/crest-nicholson-reaches-debt-for-equity-swap-deal/3133693.article

 

Background (UK Company Law): http://www.bristows.com/?pid=46&nid=1395&level=2

And interesting: Has Macquarie lost its magic? http://www.businessspectator.com.au/bs.nsf/Article/Macquarie-Group-JP-Morgan-investment-banking-profi-pd20101014-A89SU?OpenDocument#Scene_1

Edited November 11, 2010 by gilf_uk

[Tugger]

To be fair Frances of the many self appointed, English/assorted Comeover, Manx 'experts' you are far from being the most irritating. At least you appear to have studied the Island seriously, your usual comment reflects your genuine interest and accumulated knowledge too. You chose the island as your hobby but it could, just as easily, have been Jersey, Anglesey or Rockall for that matter. I've no doubt that whichever island you decided upon, it's history would have been subjected to your obvious intellectual rigour. So far as I'm concerned you're most welcome here, there's no suggestiom of 'boat in the morning' in this comment. However despite your learned knowledge of our island you'll never 'get' what being Manx means.

 

Oh my God, you pointless little prick