A behind-closed-doors bid to bring Red Funnel back under local ownership has collapsed at the 11th hour, with Vectis Ferries Limited claiming their £100million rescue and investment plan has been pushed aside in favour of an international private equity buyer.
It can be revealed today (Friday) that the Isle of Wight-based group, led by a team of former Red Funnel executives and respected maritime experts, have spent the past 10 weeks negotiating with Red Funnel’s owners, but say their carefully-prepared bid has simply been used to drive up the price before being rejected.
Vectis Ferries has warned that another short-term investor taking control of the cross-Solent operator will do nothing to resolve the firm’s long-running problems, including outdated ferries and declining reliability.
The company has also made clear that, if shut out of the takeover process, it has credible options to launch a rival ferry service for the Isle of Wight.
The locally-led consortium includes Kevin George, former Chief Executive of Red Funnel, and Graham Barnetson, the ferry firm’s former Chief Financial Officer. They are joined by former non-executive director Patrick Seely, Wight Shipyard’s founder Peter Morton MBE, and shipping industry consultant and turn-around specialist James Walton.
The group says it has secured backing from a private shipping company, a respected Island family with deep maritime roots, and private investors. Together, they have pledged more than £100million for new next-generation ferries and shoreside facilities.
Crucially, the proposals included aluminium-built vehicle ferries that would slash crossing times and boost service frequency. This vision can create skilled jobs at Wight Shipyard while delivering faster, more reliable crossings for Islanders, businesses, and visitors alike.
In a strongly-worded statement, Vectis Ferries has said Red Funnel’s owners and advisers have prioritised ‘short-term incremental value’ and were now well advanced with an alternative offer, believed to be from an overseas private equity company.
A spokesperson for Vectis Ferries has said:
“Vectis remains ready to re-engage at the earliest opportunity. Until then, the chance to secure faster ferries, more frequent services, and new Island jobs is on hold – a reminder of what could be lost if decisions about the Island’s lifeline transport services continue to be left with those with no real ties to the community.
“It is time for Islanders to have a say in their future.”
The company has called on the Government to intervene, reminding Red Funnel’s lenders of their obligations given the lifeline status of cross-Solent services. It has also urged the rival private equity bidder to step aside in favour of an Island solution.
Vectis has already secured support from Isle of Wight MPs Richard Quigley and Joe Robertson, Council Leader Phil Jordan, and former trade union leader Sir Paul Kenny.
Red Funnel, which has changed ownership three times in the past 25 years, reported an accumulated loss of £195.9million earlier this year and continues to operate with ageing Raptor-class ferries that are increasingly unreliable.
While the company looks set to pass into the hands of yet another financial investor, Vectis Ferries has made clear it is prepared to compete head-to-head if necessary, keeping alive the prospect of new ships, local jobs, and a radical transformation of cross-Solent travel.
This is representative of the problems within the UK that are caused by the billionaire class. A foreign private equity firm extracting wealth from a lifeline service, they don’t care about islanders or running a cost effective service that will bring tourism to the island. All they will care about is running a minimal service whilst maximising profit. China doesn’t allow this kind of investment, it’s time we stopped wealth extraction from the UK.
Absolutely, and what I have been advocating for years across the services. Their greed is why we’re on our knees….and they designed it that way to create demand.
About time the Government got involved in this hopefully our MPs will be bring this to the attention of the Transport minister !!
Nothing will get done about it, majority of politicians
don’t solve anything, they talk the talk but don’t
walk the walk
Greed as usual will come first and they will sell to the private equity firm because they don’t give a crap about the island.
.
OH JOY… another 12 months of empty promises, followed by 10 years of declining service before being flogged off to the local scrap man with his horse drawn cart!! For gods sake, let a LOCAL team run the thing, at least they understand the needs of Islanders and there would always be a chance (no matter how slim) of Government help if it goes tits up again. I look forward to seeing which part of the investors portfolio needs propping up with any profits from RF.
Powerhouse of a team behind Vectis Ferries. I really do hope that they can get this over the line. It would be an absolute game changer the have it operated locally.
Private equity owners are the same scumbags that got us into this mess. Wightlink need telling all ferries must have back up ready to go to sea in twenty minutes or lose their licence
What licence is that?
Licence from who and for what?
You do realise both ferry firms do not have or need licence from government or council to run?
Before we say private equity bad, local business ownership, good, consider. Firstly the local business bid is still there to make a profit and re pay the hefty interest charges on 100 million which will be considerably higher than base rate that they suggest it will cost to win the bid, then a group of previous existing so called executives of the company want to run it, how good a job did they do first time around.
Why on earth would a private equity company buy a loss making company with an ageing fleet etc? Talk about buying “a pig in a poke”.
Because they can offset all their huge losses against tax.
Because, as is RF currently, the ‘investors’ effective lend money to the passenger operations company in order to operate, and that arm has to pay back the loan and therefore never breaks even. Meanwhile the investments company extract the loan repayments and use it to invest in pensions, arms and the things which DO generate profits. It’s the equivalent of any PFI contract you could name.
It would be brilliant to see this local team take over. But they’ll have to find at least enough to buy out the existing debt, and then finance replacement ferries in short order. That’s an awful lot of moolah, and who knows whether they can pull it in? Even so, HM Gov MUST step in here.
Messrs Robertson and Quigley please do your stuff.
A local consortium would at least be locally accountable. Not so a myriad of arm’s length obscure financial ‘investors’, as we already have found out.
How will they be accountable? If you want acountability it needs to be at least in part in public ownership or their needs to be a legal framework which empowers external governance. While it is all driven by the money being paid to shareholders and Board members the service to the public will always run a poor second.
The ferry companies are selling a vital transportation link to a captive audience who have very little choice and zero opportunity to shop around for a better deal. Of course a private equity company is interested in buying a ferry company – it’s selling snow to Eskimo’s! Put as little capital as you can into the business, ramp up the prices and take your prize money home! Meanwhile we as islanders are once again lining the pockets of faceless fat cats as we have no alternative when we need to travel to the mainland.
The government are not interested in stepping in and taking over in this economic climate. I wonder what would happen if both ferry operators went bust leaving us literally high and dry? Maybe this is the best that we can hope for?
No matter what type or size ferry, there will always be delays, cancellations etc, due mainly to weather and tides, let alone staff going off sick..
Use the 100 plus million to go towards a tunnel.. that way everyone wins, will get more tourists again, more companies will start up on the Island, the Island will become rich again..
Imagine how beautiful the Solent would look without those awful ferries going back and forth..
Being able to just drive straight across to mainland, no queuing, no huge over expense, not sitting around for an hour on a ferry..
So many other countries are building tunnels.. much cleaner environment, better all round.
Just imagine the freedom the people would have to be able to travel…no booking, no delays, no cancellations, no changing prices daily..
BUILD A TUNNEL…
I am absolutely no fan of the current financial / operating methodology of both wightlink and redfunnel, but,..
just to play devil’s advocate..
a. the (vast) money to build a tunnel would come from where ?? oh yes, almost certainly an ‘international private equity company’,.. so with no competition, there would be no limit on how much they would charge…
& therefore it would certainly be no cheaper than the current ferries.
b. Just imagine what WILL happen, when two electric cars collide in the tunnel & catch fire,.. damaging the structure of the tunnel, which would then need to be closed for weeks, or months,.. with no ferries as a back-up.
(yes, twin tunnels could be built, but that would be a lot more expensive, and
private equity wouldn’t want to pay more for something that didn’t increase teh returns they get)