THE scheme of arrangement designed to restructure Bell Lines is to be circulated to creditors and shareholders by the examiner, Mr David Hughes of Ernst & Young, this week, according to informed industry sources.
The shareholders, led by Irish Continental Group (ICG), are expected to inject between £3 million and £5 million in new equity. The secured banking creditors, who are owed around £6 million, would not face any writeoffs but the unsecured creditors who are owed £25 million, would receive only between 20p and 40p in the pound.
The largest unsecured creditors are the hauliers, who are owed about £17 million. They are expected to receive up to 40p in the pound, as they had extended significant credit to the shipping company before it went into examinership. The trade creditors, owed £8 million, would receive 20p in the pound under the proposals.
The restructuring envisages between 170 and 200 redundancies out of the 600 workforce. They are to be offered ex gratia payments on top of their statutory entitlements.
Most of the redundancies would occur in Britain and in continental Europe but around 70 would arise in Ireland. Most of these some 40, would be in Bell's Dublin headquarters. SIPTU is to hold a special meeting of members to decide if the union would oppose the redundancies or seek special compensation for the transfer of work to other locations.
ICG has a 25 per cent stake in Bell Lines. Two venture capital funds, NatWest Ventures and CVC Capital Partners, each have a 30 per cent stake. The management controls the remaining 15 per cent. These holdings now have little value.
Bell Lines went into examinership last February to facilitate the orderly restructuring of the company". Its financial problems were first highlighted in the middle of 1996 when ICG announced its interim results.
However, they turned out much worse than expected and earlier this year ICG wrote off its carrying interest in Bell Lines. That amounted to £1.6 million. Its share of losses amounted to £1.5 million, which indicated that Bell incurred a loss of £6 million.
Bell Lines has been experiencing trading problems on a number of fronts. In common with other freight operators on the British and European routes, it suffered from lower volumes and rates as a result of the pricing policy of the Channel Tunnel shuttle.
On top of that, its Waterford Belview terminal was hit by hurricane Lili which damaged two cranes. That crippled operations and cost it £4 million.
