gilf_uk
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Posts posted by gilf_uk
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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://news.alibaba.com/article/detail/markets/100182229-1-macquarie-media-warns-debt-problem.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
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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.
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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!
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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!
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Who will you be sailing with in 2013?
The IOMSPC - just not with it's current owners or massive debt, or possibly even it's current boats. It is MIOM which is going to have the problem and the IOMSPC will be sold off for a fraction of what the current owners paid for it. Even if it only make £1million a year it will still be attractive to someone.
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Quick review:
Turnover Profit Margin
2007 55,044,000 14,816,000 26%
2008 53,937,000 9,805,000 18%
An interesting point is that SPCO has debtors listed of £66,609,000, inclusive of £4,641,000 in trade debtors as at 31/12/2008. Out of this, £60,972,000 in amounts owed by parent and fellow subsidiary companies. SPCO also owes £35,225,000 to parent and fellow subsidiary companies. One big merry-go-round with the companies reserves?
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THANK YOU!!!
The IOMSPC is registered in the UK as a foreign company therefore has to publish it's accounts and these are available for anyone to view/ download. Enjoy!
2008 Accounts:
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These are the last accounts filed at companies’ house, so I can’t read them for YE 09 yet.
THANK YOU!!!
The IOMSPC is registered in the UK as a foreign company therefore has to publish it's accounts and these are available for anyone to view/ download. Enjoy!
2007 Accounts:
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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.
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the milk could now be a bit cheesy
Isn't most of the milk from our own creamery anyways?
No
Its says on the milk we use
British Semi-Skimmed from Mixed Sources
Can you please tell us which brand of milk you use please?
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the milk could now be a bit cheesy
Isn't most of the milk from our own creamery anyways?
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In reading a link to a Hansard on another threat, it was asked in Tynwald if the Government had any contingency plan in place if the IOMSPC should fail. Now, to everyone else, having 1 percieved 'life line' to the Island, you would think that the Govt would have some kind of basic formulated plan.
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.""
So the government did recognise, even after two select committee reports, that there maybe a possibility that one day the company would find itself struggling for survival and might go bust.
I hope they are looking at a contignecy plan now!
http://www.tynwald.org.im/papers/hansards/2009-2010/th20102009.pdf (Page 15)
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I think Bill Malarkey has summed it up the way most of us are thinking:
Management to blame for Packet problems - MHKwww.manxradio.com Published online at 08/11/2010 02:40:16
South Douglas MHK Bill Malarkey believes the Steam Packet needs to look at itself, and not elsewhere, if it wants to move forward in the face of new competition.
However, Mr Malarkey believes the real problem lies in the fact the company is servicing massive loans, taken out by its parent company McQuarrie.
He is telling Steam Packet staff who issued flyers over the weekend, outlining their concerns, to look at their own management (play audio file):
It may be how you are thinking but not necessarily the rest of us.
It is also totally contradictory in that he says the real problem are the loans taken out by the parent company McQuarrie and then blames the SP and its Management. As the subsidiary company The SP and its mangement have absolutely no control over the debt as that is in the parent company so why is he blaming the SP and the management over the level of debt of the parent. It is rather like blaming me if I had a mortgage with RBS over the finances of RBS
There is a mixed board (overlap) of Directors between SPCO and MIOM (holder of the debt) therefore I think to blame the management is correct. They are Directors of the company and therefore responsible for it's actions.
It could also be said that management are responsible in the sense of the business and PR decisions it has made, i.e. going after their customers business and allowing MW anywhere near a microphone.
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Nice to see Tesco's overnight delivery just arriving at the harbour. Would have been empty shelves in Tesco's today if it was up to the IOMSPC as they cancelled last nights sailing!!
and THAT blows the reliability argument out of the water! Fantastic!
M&S will be next to switch then.....
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anyone remember this
Yes - but as I said the figures are skewed (i.e. they shot themselves in the foot) by the fact there is no financing costs whatsoever in that profit figure. The profit is then paid upstream to the parent company in the form of a dividend and it is the parent company which then pays the financing costs and passes on the actualy profit which is lower.
NOW - I very much doubt that none of the other ferry companies have **no** debt, in comparison, and even the 2nd select committee agreed that this original comparison was unfair.
The actual return of investment that MacQuarie was getting (at the time) was 4%.
ETA - **no**
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......after all as shown on the thread he did tell Tynwald in 2008 that the IOMSPC did have competition for freight. What has changed?
Indeed. What has changed is that, he was boasting in the select committee that they had increased their market share from 70% to 80% of the freight market. Now the competition has fought back and gained market share back from IOMSPC, and he doesn't like that. It's unfair. Or more likely, because it's decimated their business plan and the loss of business means they are now unable to service the parent company's debt.
And yes, it has polarized opinion on here - but while MW is still in charge, the IOMSPC is fighting a losing PR battle.
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Just if the IOMSP were to go out of business overnight do you think Mezeron would come to the rescue, Will Mezerons service bring down your cost of living or save you any money.
IOMSP would not go out of business overnight - in terms of service - it is an extremelly viable business, minus the huge debt around it's neck. And that debt sits, not with the trading company, SPCo, but with it's parent company, MIOM.
The parent company, MIOM, may breach its banking covenants, but the SPCo will continue to run, albeit with less turnover and less profit.
In 2006, the company turned over £48 million, making a profit of £17 million (before financing). The figure placed on the loss of freight is £10 million. So lets just do a straight cut - £38 million turnover and £7 million profit.
Now, there may not be enough in the £7 million profit to service the debt, but it's still a very real profit, and shows the business is viable, without the £10 million turnover from freight it's lost.
So, no, I don't expect Mezeron to come to the rescue - no need - the business is a going concern, it's just the owner that went bust because it couldn't service it's loan.
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The berth in Douglas used by Mezeron is not a reserved berth for ships, it is also used to shelter local boats during bad weather. If Mezeron have got a guaranteed berthing timetable then the Government must have been part of a new agreement. A lot of the ABs from the IOMSP are ex local fishermen who still have a close relationship with the remaining fishing fleet, If the local fishing fleet were to dock in Douglas during Bad weather then where could they be berthed, no room in the inner harbour anymore so the fishing fleet could disrupt Mezeron if so wished and very little they could do about it.
The link you provided took us through to the general harbour link - can you provide a link which confirms your statement?
And really, do the Isle of Man fishing fleet have nothing better to do than park up in Douglas in a battle which has nothing at all to do with them? I think the public would see that as pretty transparent and really quite petty.
This is a commercial battle, where one company has been short-sighted and been mortgaged up to the hilt, and another which has been in the game for a long time, is a recognised competitor to the Steam Packet, who has enhanced their service.
Edited to correct sp.
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When MW said his company was now struggling for survival - he was right. The reason being, have lost 30% (£10 million revenue) of their freight to a competitor, they will no longer generate sufficient monies to pay their interest obligations. And that is the crux of the matter.
The repayment of their borrowings is down to their Business Plan, not our concern. When they got into this UA they took a view that they could borrow heavily on the back of a Monopoly.
They made a mistake and underestimated the possibility of container traffic, tuff S**T, if every time I made a bad decision with my business and looked like loosing money, would I run to IOM GOV for a bail out?
Yes they employ far more people than I, but if say, one of the other big players over here made a bad call, would they expect public money to bail them out?
Again, completely agree. It is not our concern, it is the concern of MIOM and the lender. The SPCo itself, will still be profitable, albeit worth less than it was before.
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Some of these freight companies went with Mank Line in the 80s and caught with their pants down. Tesco have switched, do Tesco give a fuck, no they never have had any interest in any local affairs no matter where they have set up.
Graylaw have switched. So whoever brings their freight in with Graylaw has switched as well, that includes (according to their website) Shoprite, Eden Park Garden Centres and Isle of Man Creamery. Shoprite has confirmed it uses a number of different haulage firms, and I expect Tesco will as well.
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I should probably say one thing about the 36% profit margin made in one year by the Steam Packet. This was before the deduction of ANY interest charges for the monies borrowed (£186 million), so it's the profit margin the company would have made had it no borrowing whatsoever. It also does not take into account repayment of borrowed capital, which is still outstanding (like an interest only mortgage).
The company, IMO, would have borrowings, to pay for a new boat/ investment in new services (needed under the UA). So the 36% is misleading.
If we look at the historic figures, 2004, 2005 and 2006 seem high, but there is no borrowing charges/ costs in their at all, all these costs are hidden in MIOM Limited, who is the borrower.
2006 36.0%
2005 33.3%
2004 24.4%
2003 0.6%
2002 16.0%
2001 18.1%
2000 10.4%
1999 0.5%
1998 -4.6%
Long and short of it - the SPCo itself will be fine - MIOM will not be able to repay it's loans and the SPCo assets will be ceased by the lender and sold to the highest bidder.
I think, sold as a going concern is the phrase?
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Sean, its very suspect because the IOMSP are fiddling their profit margin that they have to declare to IOM Gov and the Unions are not stupid, know this, and want to keep the cash cow flowing for their members benefit, fair play to them, what else would they do.
The IOMSP don't have to declare their profit margin to the IOM Gov. There is no provision within the UA to make them do this.
They did at the 1st sitting of the select committee, but only under duress. It would not have reflected well on them if they did not release the accounts, thus showing a 36% profit, for one year. I would expect subsequent years to be less, but, alas, there has been no reason for them to release the figures.
Until now.
Sorry I understood that they had to submit their margins, a bit like Manx Gas etc. I stand corrected but in an Monopoly situation they should have to declare it, should they not? In the normal way things are done in the bigger world?
Just to prove! that they are not milking it?
Yeah I totally agree with you - they should - but the UA never allowed for it. I read some of the Hansard report from the 1st sitting and was actually really shocked at how little monitoring the IoM Govt does on the SPCo and it's financial performance.
The problem is - the government would not now be able to regulate ferry fares, or at least it could, but it would mean the end of SPCo as we know it.
When MW said his company was now struggling for survival - he was right. The reason being, have lost 30% (£10 million revenue) of their freight to a competitor, they will no longer generate sufficient monies to pay their interest obligations. And that is the crux of the matter.
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But the ABs can and so can the Dockers. All the ABs on the SP are mostly Manx some are UK not from halfway around the world being paid peanuts and rice. We wont see any benefit out of this new service, prices wont come down but may go up or cost us more in other ways, FACT
Are you for real? If your company is going to make you redundant of it's own accord, then you go on strike as a sign of solidarity against the planned redundancies.
If your company is possibly going to make you redundant because it was complacent about it's position in the marketplace, and has suddenly lost business to a competitor (which it was already aware of), you don't then go on strike and cause even more harm to a company which is already struggling. Because the people who haven't moved to the new freight service - will. They will then find it's cheaper and more convienient, and some won't go back. And this will cause even more damage to a company already in trouble.
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Sean, its very suspect because the IOMSP are fiddling their profit margin that they have to declare to IOM Gov and the Unions are not stupid, know this, and want to keep the cash cow flowing for their members benefit, fair play to them, what else would they do.
The IOMSP don't have to declare their profit margin to the IOM Gov. There is no provision within the UA to make them do this.
They did at the 1st sitting of the select committee, but only under duress. It would not have reflected well on them if they did not release the accounts, thus showing a 36% profit, for one year. I would expect subsequent years to be less, but, alas, there has been no reason for them to release the figures.
Until now.
Mezeron & Steam Packet Master Thread
in Local News
Posted
I think it's strange that they have removed the entire blog. Given his PR gaffes in pissing off the freight customers he's lost has further damaged their hopes in getting it back, and that the loss of the freight would appear to have been the result of a management decision to go after Graylaw's freight business themselves, it would not surprise me if the ruthless parent company is in the process of sacking him.
I think that a fresh face and the fact that MW has gone may help the SPCo out of the mess. MW is damaged goods now and his arrogance is only certain to hurt any attempted recovery.
I would imagine an announcement as early as next week........