Mezeron & Steam Packet Master Thread

[ITV Granada IOM]

Full interview with IoM Infrastructure Minister about the latest situation with the two freight services

 

http://www.manxtube.com/video/2514/Steampacket-latest

[Lost Login]

Is is different in the sense of whose balance sheet the debt sits on, but importantly, the directors of the parent company were/are directors of IOMSPC. Therefore the same management and control for both companies, which means your analogy is flawed.

 

You may well be right about the directors, I have not checked and I appreciate that my analogy is nor perfect.

 

However I think it still stands up as whether or not people like MW are on both boards or not I doubt they have much real say beyond operational matters and decisions. In respect of strategic decisons and financial decisions such as the borrowing I would expect they had verry little say on the matter and the real power lies with the non executives appointed by the owners or the owners themselves. It is not as if they are a PLC with a range of shareholders rather they have one shareholder who will be dictating and when they say jump the directors ask how high or resign.

 

Ultimatly my point is or was it was not the SP or local directors who are pulling the shots with regard to borrowing etc but the ultimate parent company in some shape or form.

[Sean South]

Is is different in the sense of whose balance sheet the debt sits on, but importantly, the directors of the parent company were/are directors of IOMSPC. Therefore the same management and control for both companies, which means your analogy is flawed.

 

You may well be right about the directors, I have not checked and I appreciate that my analogy is nor perfect.

 

However I think it still stands up as whether or not people like MW are on both boards or not I doubt they have much real say beyond operational matters and decisions. In respect of strategic decisons and financial decisions such as the borrowing I would expect they had verry little say on the matter and the real power lies with the non executives appointed by the owners or the owners themselves. It is not as if they are a PLC with a range of shareholders rather they have one shareholder who will be dictating and when they say jump the directors ask how high or resign.

 

Ultimatly my point is or was it was not the SP or local directors who are pulling the shots with regard to borrowing etc but the ultimate parent company in some shape or form.

Ok. Let's ceasefire on the abuse, can we?

 

I'd really like your opinion on the points you raised above:

What you say about the CEO and Local Directors not having a say on the borrowing and financial decisions - If you were CEO or a Director of a similar company and the company of which you were Director was being deluged in debt that was going to jeopardise the long term stability of the company, would you remain as a Director or CEO? Bear in mind that in law, Directors have clearly defined responsibilities...

 

I most certainly wouldn't and given that I was good enough to get to the position of Director or CEO, I would be very confident that I would land a job of equal status quite easily.

Edited December 1, 2010 by Sean South

[Evil Goblin]

What you say about the CEO and Local Directors not having a say on the borrowing and financial decisions - If you were CEO or a Director of a similar company and the company of which you were Director was being deluged in debt that was going to jeopardise the long term stability of the company, would you remain as a Director or CEO? Bear in mind that in law, Directors have clearly defined responsibilities...

I understood that the debt was in the parent company and not the Racket itself. In that case the debt is a matter for the directors of the parent, not the directors of the Racket.

[Lost Login]

 

I'd really like your opinion on the points you raised above:

What you say about the CEO and Local Directors not having a say on the borrowing and financial decisions - If you were CEO or a Director of a similar company and the company of which you were Director was being deluged in debt that was going to jeopardise the long term stability of the company, would you remain as a Director or CEO? Bear in mind that in law, Directors have clearly defined responsibilities...

 

I most certainly wouldn't and given that I was good enough to get to the position of Director or CEO, I would be very confident that I would land a job of equal status quite easily.

 

It is a very difficult question to answer in that the directors have a fiduciary responsibility to the shareholders. If the shareholders decide on X course of action then I believe they can instruct the directors who can either accept or resign. Just like any director could if outvoted on a matter in the boardroom. I once had to take legal advice on this as the shareholders were instructing me to take a particular course which I and the board did not agree with. I have to admit I was quite surprised to be advised that the directors could be instructed by the shareholders as I thought at most they could remove us. I cannot remember what the consequences were if we did not follow the advice as it was several years ago and as a board we resigned

 

What would I do in the position of the CEO of SP, well in reality you are little more than a paid employee with a grand title retained to run the operational side. With a family to look after a mortgage to pay would you resign on such a point knowing in would not make a jot of difference. You also might take the view that why you might disagree with the action by staying in place you are the best person to mitigate the consequences.

 

This is why I dislike a lot of the personal criticism of MW as he is in my opinion little more than a well paid employee of the SP. He may deserve criticism on certain points but much of what he gets criticised over he probably absolute no control over. Basically he is the operations director who manages the course of the ship he does not set the course of the ship. Now I am only guessing much of this but from experience I really cannot see the guys who ultimately paid £200million for the SP not having their hands on the tiller.

[b4mbi]

 

However I think it still stands up as whether or not people like MW are on both boards or not I doubt they have much real say beyond operational matters and decisions. In respect of strategic decisons and financial decisions such as the borrowing I would expect they had verry little say on the matter and the real power lies with the non executives appointed by the owners or the owners themselves. It is not as if they are a PLC with a range of shareholders rather they have one shareholder who will be dictating and when they say jump the directors ask how high or resign.

 

Ultimatly my point is or was it was not the SP or local directors who are pulling the shots with regard to borrowing etc but the ultimate parent company in some shape or form.

 

 

I'd really like your opinion on the points you raised above:

What you say about the CEO and Local Directors not having a say on the borrowing and financial decisions - If you were CEO or a Director of a similar company and the company of which you were Director was being deluged in debt that was going to jeopardise the long term stability of the company, would you remain as a Director or CEO? Bear in mind that in law, Directors have clearly defined responsibilities...

 

I most certainly wouldn't and given that I was good enough to get to the position of Director or CEO, I would be very confident that I would land a job of equal status quite easily.

 

I think you both have valid points.

 

In practise, I suspect the bones of what happened was that the local directors were heavily influenced by the ultimate parent representatives (professional advise from Maqu related company, what were all those fees for??)) into accepting the deal for the debt and of course at the time (when collectively all parties hadn't realised that the UA wasn't watertight) they possibly quite reasonably assumed that the business was sustainable this way.

 

However, I *think* the facility was very recently refinanced, very close to the time of the announcement of the competition. It is at this point the directors of the MIOM and IOMSPC should have realised that the business model was not sustainable and been offering all sorts of objections etc.

 

Practically speaking however, would you bite the hand that feeds you? What real alternative did local directors have other than to accept refinancing? Were they going to declare insolvency of MIOM and put it into administration??

[Lost Login]

Practically speaking however, would you bite the hand that feeds you? What real alternative did local directors have other than to accept refinancing? Were they going to declare insolvency of MIOM and put it into administration??

 

Insolvency and administration was probably not an option on the basis that the auditors have probably stated the company is solvent so they can sign off the accounts on a going concern basis.

 

Also from memory in a liquidation or administration shareholders have to agree and even if they did not the shareholders have the power to call an EGM and vote to dismiss the directors and appoint new who may be more accomodating.

 

Practically as you say what real alternatives did the "local" guys have except to resign?

 

In addition to the above I have not checked the Steam Packets mem and arts etc so we I do not know what specific voting rights etc might have been included

[b4mbi]

I'd really like your opinion on the points you raised above:

What you say about the CEO and Local Directors not having a say on the borrowing and financial decisions - If you were CEO or a Director of a similar company and the company of which you were Director was being deluged in debt that was going to jeopardise the long term stability of the company, would you remain as a Director or CEO? Bear in mind that in law, Directors have clearly defined responsibilities...

 

I most certainly wouldn't and given that I was good enough to get to the position of Director or CEO, I would be very confident that I would land a job of equal status quite easily.

 

It is a very difficult question to answer in that the directors have a fiduciary responsibility to the shareholders. If the shareholders decide on X course of action then I believe they can instruct the directors who can either accept or resign. Just like any director could if outvoted on a matter in the boardroom. I once had to take legal advice on this as the shareholders were instructing me to take a particular course which I and the board did not agree with. I have to admit I was quite surprised to be advised that the directors could be instructed by the shareholders as I thought at most they could remove us. I cannot remember what the consequences were if we did not follow the advice as it was several years ago and as a board we resigned

 

What would I do in the position of the CEO of SP, well in reality you are little more than a paid employee with a grand title retained to run the operational side. With a family to look after a mortgage to pay would you resign on such a point knowing in would not make a jot of difference. You also might take the view that why you might disagree with the action by staying in place you are the best person to mitigate the consequences.

 

This is why I dislike a lot of the personal criticism of MW as he is in my opinion little more than a well paid employee of the SP. He may deserve criticism on certain points but much of what he gets criticised over he probably absolute no control over. Basically he is the operations director who manages the course of the ship he does not set the course of the ship. Now I am only guessing much of this but from experience I really cannot see the guys who ultimately paid £200million for the SP not having their hands on the tiller.

 

totally agree on this well made point.

 

Of course, the guys who bought it financed the aquisition with debt (and their own equity, £52m per balance sheet IOMSPC 31/12/08)

 

If it gets to a situation where the shareholders are unwilling to provide further equity or guarantees to the bank if the terms of the loan agreement cannot be fulfilled, then the bank could in practise have their hands on the tiller cause they could force administration on the group by calling in their loan

 

Note 21 of the 2008 accounts is very interesting, as the day they received the letter of waiver surrounding certain terms on the loan agreements is the same day the directors signed the accounts.

 

It's not totally clear whether the margin they are paying is 1.8% or is it 8% (ouch) ??? (would expect it's 1.8% above libor)

 

Also note that the amended term which strongly suggests that the bank has already stopped the group from making external dividends payments to shareholders (meaning that the Australians won't be getting ANY returns on their investments from 28/08/2009 onwards.....)

 

Looks like the bank are already pulling the strings....

[Sean South]

 

I'd really like your opinion on the points you raised above:

What you say about the CEO and Local Directors not having a say on the borrowing and financial decisions - If you were CEO or a Director of a similar company and the company of which you were Director was being deluged in debt that was going to jeopardise the long term stability of the company, would you remain as a Director or CEO? Bear in mind that in law, Directors have clearly defined responsibilities...

 

I most certainly wouldn't and given that I was good enough to get to the position of Director or CEO, I would be very confident that I would land a job of equal status quite easily.

 

It is a very difficult question to answer in that the directors have a fiduciary responsibility to the shareholders. If the shareholders decide on X course of action then I believe they can instruct the directors who can either accept or resign. Just like any director could if outvoted on a matter in the boardroom. I once had to take legal advice on this as the shareholders were instructing me to take a particular course which I and the board did not agree with. I have to admit I was quite surprised to be advised that the directors could be instructed by the shareholders as I thought at most they could remove us. I cannot remember what the consequences were if we did not follow the advice as it was several years ago and as a board we resigned

 

What would I do in the position of the CEO of SP, well in reality you are little more than a paid employee with a grand title retained to run the operational side. With a family to look after a mortgage to pay would you resign on such a point knowing in would not make a jot of difference. You also might take the view that why you might disagree with the action by staying in place you are the best person to mitigate the consequences.

 

This is why I dislike a lot of the personal criticism of MW as he is in my opinion little more than a well paid employee of the SP. He may deserve criticism on certain points but much of what he gets criticised over he probably absolute no control over. Basically he is the operations director who manages the course of the ship he does not set the course of the ship. Now I am only guessing much of this but from experience I really cannot see the guys who ultimately paid £200million for the SP not having their hands on the tiller.

It makes sense that, as shareholders, they instruct the board to carry out their wishes. However, clearly, the board are not obliged by law to carry out said instructions. Yes, the next step would probably be resignation. Better, in my opinion, to resign while there is still a viable company to resign from - looks a bit better on the CV - than to wait around while it drowns in a sea of red ink.

 

Look, I have nothing personal against MW or anyone else at the SPCo. I don't know the chap. My opinions on him are solely based on his attitude when dealing with the public and his well (self)publicised tantrums when he was faced with some competition. Something most of the rest of us deal with every working day. I still, in spite of all the accusations and abuse levelled at me, strongly believe that with competent management and a much smaller debt the SPCo could easily handle competition and most probably see it off. I certainly do not share your belief that the current Management are in any way competent to deal with it.

 

I absolutely believe that the Government must stay well out of this and concentrate on devising a strategy to deal with any short term fall out associated with it.

 

Now... Must tidy the bedsit

[Lost Login]

Note 21 of the 2008 accounts is very interesting, as the day they received the letter of waiver surrounding certain terms on the loan agreements is the same day the directors signed the accounts.

Probably not that unusual as the auditors may have wanted something in writing before they would sign off on a going concern basis. Frequently it is the case if it is a related company loan or where they may be a technical breach in a covenent or if the terms are due being renegotiated.

[b4mbi]

Note 21 of the 2008 accounts is very interesting, as the day they received the letter of waiver surrounding certain terms on the loan agreements is the same day the directors signed the accounts.

Probably not that unusual as the auditors may have wanted something in writing before they would sign off on a going concern basis. Frequently it is the case if it is a related company loan or where they may be a technical breach in a covenent or if the terms are due being renegotiated.

 

Highly likely, yes.

[Lost Login]

 

It makes sense that, as shareholders, they instruct the board to carry out their wishes. However, clearly, the board are not obliged by law to carry out said instructions. Yes, the next step would probably be resignation. Better, in my opinion, to resign while there is still a viable company to resign from - looks a bit better on the CV - than to wait around while it drowns in a sea of red ink.

 

If you do not carry out the instructions then I think potentially you could be sued for any loss arising. As I said a few years ago we took legal advise in the office and the advise was surprising. John Wright may wish to comment if he is reading this

 

As for resigning it is a great class room answer but in the real world with a family and mortgage it tends not to be so clear cut. If the bank are prepared to lend £200 million after undertaking all their due dilligence would you not take some comfort from this, specifically that the bank thought the borrower was good for the debt. Banks tend not to like loaning money unless they think they will get it back!

 

Equally it would be hard to argue in a job interview that you resigned because you considered the debt made the company unviable as it would mean that you were admitting as the CEO you could not persuade the board to back or follow you. Does that show lack of leadership etc? Secondly you are going to have to persuade your potential new employer the bank etc were wrong to lend the money. I expect most people would take the view that as the bank was putting its money at risk amd is supposedly an expert on such things they are on balance more likely to be right.

 

Thirdly I have been on the board of some companies in difficult times. I have on occasion been appointed by a court. Jumping ship would be easy answer the hard decision is to stick with it, navigating it through the hard times and turning it around. It is surprising how many of the best entrepreneurs have in effect done this. They have bought out or stayed on board insolvent companies turned them around and made a mint.

 

and his well (self)publicised tantrums when he was faced with some competition. Something most of the rest of us deal with every working day.

I have no opinion to make on his dealings with the public as I have never had to deal with him but his "tantrums" as you put it I basically applaud. His job is to do the best he can for the SP and its shareholders and no body else. Now he could have kept quite and tried to fight off Mezeron but by going public he has sort to bring pressure to bare in his favour. MHK are being questioned, the Unions are picketing, Manx Forums have been discussing for 80 odd pages. Basically however much we may not like it he has had a go at putting pressure on those that maybe can influence matters in the SP favour. He had a card, maybe not a very good card, and he has played it.

 

I still, in spite of all the accusations and abuse levelled at me, strongly believe that with competent management and a much smaller debt the SPCo could easily handle competition and most probably see it off. I certainly do not share your belief that the current Management are in any way competent to deal with it.

 

You like the rest of us have no idea about the mangement structure of the SP, what restrictions they may or may not operate under, what restrictions the loan may place on both companies. Without any of that knowledge none of us have the faintest idea whether or not management has been competent or is competent to deal with the current position. You though not prepared to accept that a complete lack of knowledge on a matter should in any way mean you can not readily jump to a conclusion. On the other hand most other posters on here are prepared to say we simple do not know

 

With regard to smaller debt then yes the lower the expenses then yes companies have more flexibility. But debt in companies and high gearing is common place. The important thing is can the debt be financed by one of several means and again none of us know

[Tugger]

Basically however much we may not like it he has had a go at putting pressure on those that maybe can influence matters in the SP favour. He had a card, maybe not a very good card, and he has played it.

 

By going public he has played it incredibly badly. He will lose his job and the Aussies will lose this company

[Lost Login]

Basically however much we may not like it he has had a go at putting pressure on those that maybe can influence matters in the SP favour. He had a card, maybe not a very good card, and he has played it.

 

By going public he has played it incredibly badly. He will lose his job and the Aussies will lose this company

Fair enough but why? Are you suggesting that if he had kept quiet shady deals would have been done in the background to keep the SP afloat or help finance it? I do not see how keeping quiet would have made much difference the SP would have still made roughly the same profit, the parent co would have the same loans to pay off or am I missing something?

[The Raven King]

It will be interesting to see when the Tourism folk start promoting the Island in Ireland this time round - they usually seem to do it later rather than earier. My friends and acquaintances in the Republic are making decisions about 2011 holidays now and over Christmas.

 

Holidays?? Jeez, you should be wearing fookin sackcloth and ashes for the next 10 years!!!