BELL Lines, which has been affected by intense competition from the Channel Tunnel, has gone into examinership. Mr David Hughes of Ernst & Young, has been appointed interim examiner.
Bell Lines had been having restructuring talks with its bankers and shareholders. The decision to appoint an examiner is to "facilitate the orderly restructuring of the company according to a statement from Bell Lines last night.
Mr Pat Hayden, Bell Lines' managing director, told The Irish Times that his priority was to keep the group operational and maintain revenue. Talks will be taking place with the examiner, and others, over the next few days to formulate a plan for the future.
Irish Continental Group (ICG) has a 25 per cent stake in Bell Lines and its support is crucial to Bell Lines' survival. It has said that Bell Lines has viable business and is understood to be continuing to support a restructuring plan.
Bells Lines which provides shipping services between Ireland, Britain and continental Europe employs a total of 636 people with 161 in Ireland. The company's creditors are understood to be owed £20 million but there is bank debt on top of that.
In the petition to appoint an interim examiner, the High Court was told the company had a surplus of assets over liabilities of £8 million. However, with the absence of the further working capital it required, the company was in a position where it was likely that it would by unable to pay its debts as they fell due. Nevertheless, Bell Lines said it was capable of survival as a going concern.
It owed substantial sums to hauliers. About 103 did business with the company in Ireland. For many, the company was their largest and in a lot of cases, their only customer, the court was told.
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 last month ICG wrote off its carrying interest in Bell Lines. That amounted to £1.6 million. Also its share of losses amounted to £1.5 million which indicated that Bell incurred a loss of £6 million last year.
The other shareholders also stand to lose heavily from their investment in Bell Lines. Two venture capital funds, NatWest Ventures CVC Capital Partners, each have a 30 per cent stake. The management holds the remaining 15 per cent interest.
The interim examiner has been appointed to Bell Lines, its parent company, and subsidiaries. The restructuring, Bell Lines said, is at an "advanced stage in its discussions with shareholders and banks to provide new additional working capital facilities". This, it added, should enable the company to "service its customers without interruption".
The statement from Bell Lines said it was arranging a line of credit to provide the working capital needed during the course of the reorganisation. "This line of credit is contingent upon court approval of the examinership process. Post examination debts will be paid in the normal course".
The company noted that its core operations remained very strong and were not the cause of the company's financial problems. It "will continue to service its existing customers as it has for the last 34 years", and there will be no interruption in service.
Bell Lines has been experiencing trading problems on a number of fronts. In common, with other freight operators on the British European routes, it suffered from lower volumes and rates from the pricing policy of the Channel Tunnel shuttle which has been struggling for market share.
On top of that, its Waterford Belview terminal was hit by hurricane Lili which damaged two cranes. This crippled the main hub of its operations and cost it £4 million.
It commissioned a new mobile crane in an interim arrangement which is catering for around 70 per cent of its business. The balance is being handled at other ports.
