Replies to post #2269 on Sea Containers Ltd (fka SCRA)

[finbar99]

here was what I was remembering - line towards the end. And it does seem to be the case in my gut - they still have some really good assets in there.

Collapse 'was not my fault', says Sea Containers boss
Independent Online: 22 October 2006
By Danny Fortson

Former chairman of failed group blames Government for the high price of GNER franchise

The former chairman of Sea Containers, the bankrupt transport and shipping group, has refused to take responsibility for the company's collapse, instead hitting out at the high price the Government charged for the GNER rail franchise.

Speaking for the first time since the company filed for bankruptcy protection last Sunday, James Sherwood also said he had no plans to forgo his $2m (£1m) severance payment.

Since stepping down in March from the company he founded, Mr Sherwood has become a lightning rod for criticism by investors. One investor said he had "blood on his hands".

Mr Sherwood built Sea Containers into a conglomerate with disparate businesses. In January, he helped recruit turnaround specialist Bob MacKenzie, who began furiously selling assets, including a ferry line and 14,000 containers, to raise cash, but it was not enough. The company filed for bankruptcy protection after it was unable to make a $115m bond payment. Under the filings, it listed $650m in debts and just $67m of free cash.

Mr Sherwood told The Independent on Sunday that the company was brought down by "factors ... completely beyond my or anyone else's control". Instead, he said, rising fuel prices and the 7 July London terrorist attacks were to blame.

He denied that the company overpaid when it agreed a £1.3bn offer for the GNER franchise, but added: "I should also say the Government required that certain assumptions were used in the franchise bid, like an annual GDP growth of 2.5 per cent. The Government insisted that these assumptions be used to obtain the franchise. It's a bit unfortunate that they may not stand by those assumptions later on."

Sea Containers is currently trying to renegotiate the contract with the Department for Transport. The UK's GDP growth rate would have affected the price of the franchise because it influences the rate of growth of the rail industry.

Mr Sherwood's $2m severance is now a claim in the bankruptcy process. "I'll get paid at the end of the day. The value of the assets of Sea Containers exceed the liabilities of the company."

The group's two pension schemes have a deficit of £133m and could be put into the Pension Protection Fund. Mr Sherwood receives $250,000 annually from his Sea Containers pension in the US.

[racket scientist]

I like the "candid" comment from the former CEO,
{that he wasn't worried about his shares during bankruptcy} and as you said, you can't count on it, but it sounds encouraging nevertheless.

Since this is my first shares' ownership of a bankrupt company, I'm reading everything I find, and it's a real education seeing the workings. The concern about exit financing is valid, but hopefully it is not a major obstacle.

If you find anything about Debtor-In-Possession {DIP} financing please let us know. Thank you, and glad to see you're aboard.


Charles

[prls123]

Eventhough there is the complex situation with regards to the many subs the company has and the complex accounting that goes along with this, it is unclear at this point in my mind that SCRA would need a large "Exit Facility" to emerge from bk. The company did enter into DIP financing in July of 2007 which effectivly reworked the terms of the obligations that they had to Wachovia and other banks. This DIP financing was in the amount of $170 Million total of which $145 million was used to repay indebtedness by two subs to Wachovia and others, and another $25 Million as a revolving credit facility of which at Nov. 2007 no money's had been drawn from this amount. At the end of Nov. 2007, I believe the company has approx $46 Million cash on hand with the additional $25 million unused credit facility to draw from.

At this point in time, it is hard for me to see how much, if at all, of an exit facility the company would need. That said, I think we would need to see what obligations are left to Bond holders. Hard for me to see/find/assess this at this point.

I understand what finbar99 is saying with regards to access to financing given the "credit crunch" that is ongoing. However, I think it would be heplful to the board if we can better understand the other obligations (bondholders, etc) that the company has in order to see what we may be up against going forward with respect to exit financing or the lack of need for this going forward.

Any thoughts or DD would be appreciated.

Good luck

prls