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Deemster

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About Deemster

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  1. Per AIS this morning, 46 minutes out from Douglas she is currently bombing along at - 14 knots
  2. What’s this I hear about Govt trying to sell some or all of the shares in the Steam Packet? Is there going to be a public tender?
  3. Spot on but the biggest item of the lot is the c. £150m needed for two new ships especially if they are the new ones promised and up at the 142m length required for future-proofing. This takes the total required to nearly £400m which is a big bet for our Government. Alf C says the business makes £12-15m profit pa which does not sound like enough to service £400m of capital
  4. Two modern ropax ferries, slightly bigger versions of CalMac's Loch Seaforth, one hybrid and/or LNG powered would do the job every day to Heysham (twice) and to Liverpool. One would be mainly freight focussed like the Ben and the other primarily passenger focused with more powerful engines for a shorter passage time. Both however could perform both roles. Cost about £120/130m for the pair and we could look forward to 20 plus years of reliable service at ticket and freight prices significantly lower than today in real terms because we wouldn't have to fill up the Seacat which drinks diesel and we wouldn't need the Arrow for the days when the Ben breaks down and it"s too rough for the cat. These could run off the existing port facilities once the new Liverpool terminal is ready.
  5. The Sultan and Notwell are only arguing because the Co and its investors are allowed to hide their accounts which is not right. A few further points: 1. the bank and the distressed debt funds may hold the debt in the co at £100m but this is irrelevant as they own the debt and the equity so they will actually seek to to get nearer £200m returned to them 2. the Co makes £15-20m cash pa and doesn't pay any tax to speak of. Also it doesn't invest. So if they wrongly get awarded the UA extension they will get all their £100m back and more 3. This is not their ambition as I say above they want a lot more - nearer £200m Now here's the big point: Every pound up to their wish of £200m they get from bullying Govt into extending the UA and signing a new concession will go towards that £200m figure. None of it will go into new ships or terminal facilities on the route. No, that money will be provided by new investors and new banks who will only make a return on their investment by fleecing the Island again. The CEO and Chairman point out the Co has a 200 year history. This Island has a much longer one and many operators have provided a sea service. If the SPCo thinks it can rip us off again it is quite wrong and I have no doubt that, based on our discussion on this site over the last few days, our elected representatives (with us and that includes many SPCo employees) at their shoulders will prevail against them. Let's be clear they have now become a threat to the Island's economic success
  6. SPCo ("Mezeron competition is unfair"; "route can only support a single operator" etc) can change the rules of the game when it suits them. True colours are shining through now. I believe their ships are too old for the whole of the UA extension period - there is a 25 year old limit. So Govt can actually tell them to get ready to pack up now. At that point their business is unsaleable (we know this is their plan A) and they cannot raise any money easily to buy or build new ships.By 2020 marine emissions laws will mean the Ben will have to burn diesel and so become much more expensive for them to operate. Also the SPCo linkspan is pretty old. So this latest spoiler tactic which is in essence economic treason will not actually work. They will try to cherry pick freight but the Ben will not be competitive vs a modern freight roro out of Heysham. A fast modern ropax into the Mersey will provide back up and a more reliable all year round daily service than the Manannan (which won't in any case have access to an in-river berth shortly). And yes there are investors around to put up the money for this as long as Govt backs the plans and supports the ships with all Govt-related cargo and other measures. Come on Govt - the SPCo are behaving like pirates. Stand by to repel boarders!
  7. This is all part of the group - there was a structure chart provided by Macquarie in the Tynwald hearings. Splitting ship ownership and commercial operations is a good idea especially on routes like this where you need special vessels. Govt can award a longer concession on the ship-owning co reflecting it is there that the investment is being made and a shorter one on the operating co. The two entities do not need to be owned by the same company in fact it reduces the cost of capital if they are not
  8. You need about £120m for two brand new purpose built (i.e. they can fit the existing harbour which can be changed to achieve about 140m length) ships for the route. Half of this can be debt funded. The rest, the equity, works out to £750 each per IoM resident. This equity could offer a much better return than you get from the bank and eventually could be listed on a market. The cash dividend could be 5-6%pa and the total annual return including debt repayment over 10pc. I'll put in my share of the cash! However there are many long term investors who would go for this so maybe we could reserve some for IoM persons - maybe those who would qualify as IoM workers - and place the rest with professional investors. Another sweet thing about this scheme is that there would be a large cash surplus £5-10m pa available to invest on the Island. This is because there is no need to pay any goodwill to the SPCo shareholders
  9. The Portuguese bank is or was recently itself bust or being restructured to use the technical term. The other investors include various distressed debt funds who will also be very keen to exit. The buyer will be another infrastructure fund or just maybe a ferry operator. Another solution here is for Govt to work with a vessel provider who finances and builds two new vessels for the route on a long term fixed price charter/rental. The rental is paid out of freight/ticket revenue of which there is plenty. This provides cost effective long term security and continuity no matter whether it's SPCo or another operator selling the tickets and running shoreside operations. This would save about £100m overall but unfortunately the bank and the others wouldn't maximise their return although they would get out at a respectable level if they operate the next 2020-26 extension.
  10. There is no embarrassment in doing something like this. Govt is simply tidying up a piece of infrastructure related legislation and global investors would understand this. The UK Govt has been revisiting old PPP contracts and weeding out any that in error conferred too much value on the contractor as in this case. The measures and solutions outlined earlier are fair reasonable and proportionate and even if a bit of legislation is required so what - we are all learning the ropes on this contract at least. There will be no shortage of potential equity, debt or operational partners if required to run this great historic route and ready to improve it too.
  11. Good question again. Government lawyers should be all over this. However as Govt and SPCo have both agreed in the past that there is only room for one operator economically if they are allowed to continue to use the linkspan I would say Govt should acquire it under a compulsory acquisition order in the national interest. This clearly (certainly arguably) would be in the national interest on many levels and it is only recently that the cry of unfair competition went up when Mezeron started carrying cargo for a well known supermarket group in the short-lived container era (which wasn't I believe an operation which actually broke the UA's rules).
  12. Notwell That is an excellent question. The UA has not kept up with the passage of time and so the SPCo will say it is more honoured in the breach of the agreement than in adherence to it. However a Govt lawyer if instructed to do his work will likely find in my humble opinion the Co is in breach on the ship ages point and that could be enough given political will to refuse to extend/renew. Or perhaps to extend/renew temporarily until the ships reach their normal retirement age. Doubtless the SPCo will say they are exceeding their UA responsibilities and threaten to cut the Island off. However you could always employ a Government chartered ship to perform extra sailings if required until SPCo vacate properly and their loyal staff (well most of them) can be re-hired by a new operator.
  13. They do own the two old ships, they charter in the Arrow. The old ships would be valued at about £20m in today's market but this isn't relevant to the Company. Most of the Company's value (say £100m plus today, debt and cash free) stems from the cash flow they will receive from operating from now to the end of the UA. Interestingly everyone assumes they will get the UA extension in 2020 to 2026 even though the Ben and the Manannan will both be older than the ship age limit stipulated in the UA which seems odd. Adding in a new concession to say 2041 will add a very substantial cash value (say an extra £20m pa so say £300m in nominal terms) to the value of the Co. It will however have to invest (mainly borrow!) say £80m in new vessels etc to get that cash and of course you need to put that in terms of today's value. So you might tot it all up today as being worth £100m as it is (assuming there is an extension to 2026), plus another say £200m in today's money for the new concession less say £80m in capital expenditure etc. Grand total is £220m which would be enough to get the creditor banks out of their hole and leave them writing back a bit of a profit. By the way I believe there is a significant unfunded pension liability in the company. If I was in Government one condition I would insist on is that the pension under-funding is immediately made good and that the fund is maintained at breakeven or better for the life of the UA. Government should be pushing for a much greater economic benefit as the Company and its shareholders can afford to be really generous. You are right, the shareholders will sell the business as soon as they have secured the new concession.
  14. There is some financial information in the Oxera reports and some disclosed at UK Companies' House. The Steam Packet makes about £15-20m pa profit mainly on freight. Their tangible assets employed (the two old ships) are worth about £20m - on a good day. So they make about 100pc return pa on their tangible assets and, not surprisingly, plan to milk that return through to the end of the UA extension. Unfortunately their owners decided to value the Co at well north of £200m and though they (Macquarie and similar) are no longer invested, their creditor banks are still owed their money and want to ensure that it (still £100-200m is outstanding in debt and equity) is returned. So that £15-20m pa profit is being used to service useless capital instead of investing in new infrastructure and ships. And we the Manx people are being forced to pay for the sins (or the borrowings in this case) of our fathers in sub-standard services and rip-off freight rates and fares. If it wasn't for this debt (which in reality is not Government's nor 'ours') we could use that profit of £20m pa to buy two brand new ships and still have £5-10m pa left over to contribute to the economy, build a school or two or do something useful. That is cash every year, index-linked, for the 20+ year life of those ships. It is likely all SPCo Manx employees could be retained. But to get that money for new ships instead of second hand ones and smoke and mirrors in this revised SPCo proposal (how old will the Ben be in 2041?) someone in Govt needs to say NO to the Steam Packet and its creditor banks. Perhaps we could start by having full disclosure of all the relevant information and then let's use that information to run a tender process to which the SPCo is cordially invited.
  15. Well Asitis I think we agree on something!
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