After months of denials, the truth about Red Funnel’s potential sale has come to light, thanks to one of its would-be buyers.

Back in March, the IW Observer reported that the departure of eight directors hinted at an imminent sale: iw.observer/whats-going-on-at-red-funnel. Despite this, a Red Funnel spokeswoman brushed it off as “a periodic review of board structures.”

Last week, we disclosed that Arcus Infrastructure Partners (AIP) were eyeing up the company: iw.observer/deafening-silence. This week, it emerged that they had emailed some of our elected representatives to find out whether they would be “constructive partners” if they bought the company.

The harsh reality is that Red Funnel’s financial situation is dire. Edward Lilley, AIP’s senior investment director, confirms that, following the directors’ departure in March, “the company and its lenders initiated an urgent sale and capital-raising process.” He emphasised that funding is needed immediately along with millions for “near-term investment”, for infrastructure and new vessels, since the “entire fleet of RoRo ferries is reaching the end of its useful life.”

No-one can argue with the need to replace unreliable boats. Yet, Mr. Lilley, for some reason, omits to mention that the “immediate need” includes £40.7 million for a bank loan due for repayment in July.

Mr. Lilley blames “extremely challenging” trading conditions – citing Covid, lockdowns, and high inflation – which, he implies, are responsible for “significant operating losses in recent years.” However, Wightlink, facing similar challenges, reported an increase in operating profit in its accounts to March 2023.

The core issue is Red Funnel’s financial structure. The company is drowning in £294 million of inter-company and external debt, with little investment to show for it. Mismanagement has worsened the situation, with staff morale at rock-bottom as they are left by directors to deal with angry customers facing cancelled and unreliable services.

Given Red Funnel’s history of evading questions, Arcus seems like a perfect fit. The IW Observer reached out to Mr. Lilley on Tuesday to ask how AIP plans to fund and run the business.

He hasn’t yet even acknowledged our email. Could it be because they intend to follow the same flawed model of high inter-company debts, rising prices, and reduced services, which has so damaged the Island? Surely not!

We can only hope that our elected representatives will tell Mr Lilley and his ilk very clearly that, unless there are clear answers to such questions, he can certainly not rely on them being “constructive partners” for yet more of the same. At least one already has, and both our MPs have, made clear that they favour new legislation to protect the Island and Islanders.

The Island’s future depends upon our ferry services. Island residents, businesses and visitors deserve answers. Any new owners need to move away from the model of crippling debt, created not by investment in the business, but to line the pockets of shareholders.