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Government to conclude Steam Packet purchase

Monday, 21 May 2018

The Isle of Man Government will this week conclude the deal to acquire the IoM Steam Packet Company.

Treasury Minister Alfred Cannan MHK will sign the formal agreement after Tynwald Members voted overwhelmingly in favour of taking strategic control of the Island’s sea services.

The move is aimed at providing long-term stability to the ownership of the Island’s lifeline ferry operations.

Government has today published further information about the deal, which will see it invest £48.3 million to purchase 100% of MIOM Ltd, the Steam Packet’s parent company, and provide £76 million as a loan to the Steam Packet.

A valuation summary by shipping finance specialists Park Partners sets out the methodology used to calculate the purchase price. It explains how the valuation of the IoM Steam Packet Company is based on the cash flow in the business rather than just its physical assets, which includes the vessels.

The report also states the benefits of acquiring the Steam Packet now rather than waiting for the existing User Agreement to end in 2026, and highlights the potential impact on customers of the company being run by the current shareholders to maximise cash returns.

The condition of the IoM Steam Packet’s vessels is assessed in a technical due diligence report by Braemar, shipping surveyors and consultants.

On-board investigations by marine engineers concluded that the Ben-my-Chree and Manannan have been well maintained. Both vessels are rated ‘good’ and scored 5 out of 7 on a sliding scale from unsatisfactory (1) to excellent (7).

The Park Partners and Braemar reports are posted on the Treasury section of the Government website, while financial information about the IoM Steam Packet Company is available to view online at Companies House.

Minister Cannan said:

‘Comprehensive analysis and due diligence has been carried out on behalf of the Isle of Man Government by independent experts. The findings point to the Steam Packet being a well-run and highly profitable business. In recent years much of the profit has been stripped out to service the debts laden on the company by its owners. By taking a controlling interest, the Isle of Man Government will ensure stability for our people and businesses.’

He added:

‘Tynwald has demonstrated strong support for this deal, which will see the Steam Packet continue to run as a commercial enterprise at arm’s length from Government. Once the deal is signed we will focus on options to bring in partners or investors and will work towards putting in place new shareholder and strategic sea services agreements.’

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