Members heard at an extraordinary meeting that the problems had arisen after the company paid about £700,000 for a new passenger boat, the Corsaire des Iles, without using a bank loan of £300,000 that Chief Pleas had already said it would guarantee.
After also spending about £100,000 on a new engine for the Sark Venture, the company had found itself with an overdraft of some £200,000.
Policy & Finance committee member Conseiller William Raymond said that because the company had not received the loan, it had exhausted its agreed finance limits with the bank and had also used funds deducted from employees which it should have paid to the States of Guernsey.
The arrival of the coronavirus pandemic had added to the problems, and the result was that Chief Pleas had funded Sark Shipping’s wages and salaries since the company had been unable to pay liabilities. These funds would be added to the existing loan which the company owes Chief Pleas.
‘We were not proposing to pay any creditors, but matters reached a head ... when the managing director wrote to two committee chairmen, saying that if certain conditions were not met, that the board would put the company into administration.’
After explaining details of the committee’s plan, he said that projections for the company were ‘as realistic as they can be’ and were based on virtually no passengers being carried for the remainder of the season: ‘But they show a requirement for a borrowing of about £600,000 by this time next year, and that is an increase of £350,000 over the existing level.’
The bank proposed to advance a loan of £350,000 to be drawn in five tranches of at least £50,000 over five years, he said.
Members approved the approval of the loan guarantee by 13 votes to one, with only Conseiller Frank Makepeace voting against. He said he was concerned that Sark taxpayers were being asked to approve loans to pay the wages and salaries of Sark Shipping crew and staff, when many of those taxpayers were currently facing ‘the humiliation’ of being means-
tested for hand-outs from the procureur.
Sark Shipping managing director Yan Milner said Chief Pleas had planned to guarantee a loan of £300,000 against the new boat, but now this has been paid for it is fully owned by the company.
Unfortunately, the pandemic disrupted the company’s plans: ‘We all presumed we were going to have a season,’ he said.
That led to the need for a new loan to be guaranteed by Chief Pleas: ‘Whether we’re paying it against the boat or anything else is neither here nor there,’ said Mr Milner.
‘At the moment, all the loans and finance agreements are in place and if things don’t get worse, we’re in no danger. Things are opening up a bit and are slightly better than we forecast.’
Passenger sailings started again about two weeks ago, and while there was a bit of a surge at first, now that the schools have gone back Mr Milner said it was a bit quieter. ‘We’re doing OK numbers, but we’ve not had a full sailing yet. But we’re pleased we aren’t where we were a week or so ago when we had no passengers at all.’
Normally the company would expect to carry about 200,000 passengers a year, but it seems set to take about a quarter of that number, he said.
Sark Shipping’s new passenger vessel, the Corsaire des Iles, should have come into operation in May, but it is still in St Malo while efforts are made to obtain its operating certificates from
the Maritime and Coastguard Agency.
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