Slash debt to cut fares
Isle of Wight County Press, 13 December 2013
New community interest company suggested to restructure massive loans and lower prices
By David Newbie
An Island businessman has called for a community interest company to be formed to reduce Wightlink’s debts with the aim of cutting the cost of cross-Solent travel.
Patrick Seely, of Dunsbury Farm, Brook, said an Island-based group of entrepreneurs, led by former boss of Liz Earle, John Buckland, was ready and willing to form the company with the support of London financial advisers.
The company would work with banks and Wighlink’s owners, Macquarrie, to restructure Wightlink’s debts with aim of reducing the cost of crossing the Solent.
In a letter to the County Press, Mr Seely said he welcomed efforts by Wightlink to make travelers’ lives simpler and cheaper but recent changes to its fare structure had been introduced ‘abruptly’ and without sufficient consultation with customers.
He said the company had £195m of bank debts and an annual interest burden of £10.5m to service.
He said: "We are, once again, involved in an important discussion with ferry companies about what can be done to lower prices.
“One option is for Wighlink to address its fundamental problem of having too much debt.
“Around 60 percent of current profits are being used to pay interest.
“To the best of our knowledge the company has no viable financial plan for its planned £40m new investment in a ferry on the Portsmouth to Fishbourne route.
“A reduction in the bank debts by 50 percent would reduce the annual interest burden by more than £5m and significantly reduce the pressure on the business.”