GNER parent seeks bankruptcy protection in US

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The Independent Online

The parent company of London to Scotland rail firm GNER today filed for bankruptcy protection in the United States

Sea Containers, the passenger and freight transport business, said it was unable to pay a $115 million (£62 million) bond which had been due yesterday.

The company, which has outstanding debts of $650 million (£350 million), is in the midst of a restructuring programme after being suspended from the New York Stock Exchange earlier this month.

Today's move will give it protection from legal action by creditors and space to restructure.

Sea Containers said the control and operations of GNER, the rail franchise which runs the East Coast Main Line, were not affected.

The group and two subsidiaries, Sea Containers Services and Sea Containers Caribbean, filed for protection in the US Bankruptcy Court in the district of Delaware.

Bob Mackenzie, president and chief executive of the group, said: "The prime reason for seeking protection is to prevent any individual creditor from taking action on its own, which would be against the interests of Sea Containers and the majority of creditors.

"The Chapter 11 process is very different from administration in the UK because we remain in charge.

"We continue with our business strategy and for our key operating units it will be 'business as usual'."

He said Sea Containers, which is based in Bermuda, had already cut its debt in half.

GNER, and SeaStreak ferry services in New Jersey, will continue their normal day-to-day operations, he said.

GNER, whose finances have been ring-fenced from those of Sea Containers, secured the right to run services between London and Edinburgh last year after agreeing to pay Whitehall £1.3 billion over 10 years.

Last year, GNER made a profit of around £20 million when it managed to pay its franchise bill. But a combination of soaring energy costs, lower passenger numbers and a decision to allow competition on GNER's routes has hit company coffers.

Sea Containers focuses on two main activities - passenger and freight transport and marine container leasing - but in March it announced its intention to exit the ferry business.

As well as GNER and SeaStreak, passenger transport includes fast ferry services in the Baltic, under the name SuperSeacat, and in the Adriatic, under the name SNAV-Hoverspeed.

It has already sold its Helsinki-based ferry service, Silja.

Marine container leasing is conducted primarily through GE SeaCo, a Barbados company owned 50% by Sea Containers and 50% by General Electric Capital Corporation.

GE SeaCo operates one of the largest marine container fleets in the world at nearly one million units.

Sea Containers also owns or partly owns five container service depots, four container manufacturing facilities and a refrigerated container service business. In addition, it owns one container ship, which is currently on charter.

Other activities include port interests in Greece, publishing, and fruit farming in the Ivory Coast and Brazil, along with UK-based business travel specialist Fairways & Swinford.

In March, it company sold its stake in Orient-Express Hotels.

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