'This company will be liquidated': GNER's owner under fire

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The Independent Online

The largest investor in Sea Containers, the debt-ridden owner of the GNER train operator, has come out in favour of breaking up the group and selling off its assets.

"This company will be liquidated and sold," said Jeff Bronchick of Reed Conner & Birdwell, a California asset manager. "It serves no other purpose." Reed Connor holds 13 per cent of shares in Sea Containers, which is listed in New York.

Mr Bronchick's comments will heap more pressure on Bob MacKenzie, Sea Containers' chief executive, whose plan is to sell non-core assets and craft a lean holding company for two businesses: shipping containers and rail services. GNER failed last week in a legal attempt to stop competing services operating on its East Coast Mainline routes.

"The question is: how can you liquidate this company in measured steps to pay off obligations with the least dilution of the equity," Mr Bronchick said. "That is the game that is afoot. The next few weeks will be very interesting."

Sea Containers is in breach of bank covenants even after selling its ferry business to pay down debt this month. Mr MacKenzie is hoping to secure a negotiated settlement between equity holders, bondholders and banks by 15 October, when it must make a $115m (£62m) repayment. The company could propose a debt-for-equity swap, a rights offering or another solution. Kevin Starke, an analyst at US broker Weeden & Co, said: "The next chapter will be a fight between the company and the bondholders, and between the bondholders and the equity holders."

Investor patience is already wearing thin. David Tepper of Appaloosa Management, the company's second-largest shareholder with 11 per cent, said he hadn't been contacted by Sea Containers. "Call me when they really decide to start talking to equity holders."

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