By Carole Dennett
Documents filed at Companies House suggests that Red Funnel may soon be on the lookout for new owners.
Eight directors of Red Funnel Limited resigned en masse on February 28. The shake-up leaves just four directors at the helm, raising eyebrows and speculation about the company’s future.
Of the departing directors, the majority have been in post since 2017, the year the company was purchased by British and Canadian pension funds in a deal said to be more than £200 million. The ferry business is part of a complex web of companies, with Red Funnel Limited the highest UK-based part of the Red Funnel Group. Parent company, Red Funnel Holdings Limited is based in Jersey.
The recent directors’ exodus coincided with a charge document filed the same day. This gives undertakings that the company’s assets will not be sold off, a move often indicating the decks are being cleared for a sale. This, coupled with the departure of non-executive directors who represent the interests of shareholders, hints that plans for a change of ownership are on the horizon.
Left to steer the ship through these uncertain waters are CEO, Fran Collins, and chairman, Stephen Ridgeway, along with fellow directors, Erik Ostergaard and Iain Delaney.
The Ferry Fiasco
Mr Ostergaard is also on the board of CalMac, a Scottish ferry company. He was previously chairman of Caledonian Maritime Assets Ltd (CMAL), which owns Scottish ferries, ports, and infrastructure. Whilst there, he oversaw a £97 million contract for two new ferries. Concerns about the shipyard led him to seek a letter from ministers, absolving CMAL of blame in the event of contract failures. It proved a wise move as the vessels are now an astonishing £260 million over budget and six years late. Dubbed the ‘Ferry Fiasco’, it triggered a parliamentary inquiry which found CMAL and Transport Scotland guilty of a “catastrophic failure of management”.
Unlike Danish Mr Ostergaard, Iain Delaney has real ties to the Island. His appointment was in September 2023, just weeks before Red Funnel announced changes to their East Cowes development plans in October. The timing could of course be coincidence, but as Mr Delaney is also CEO of local developer Captiva Homes, might his appointment give some insight into the company’s plans for “a mix of local restaurants, cafés, shops and residential spaces”? Time will tell.
Red Funnel to Wightlink
Wherever their departing directors are headed, Red Funnel executives probably hope they won’t follow the example of their former chief financial officer (CFO), Paul Winter. After working for Red Funnel for more than 11 years he left in March 2019. Less than two years later, in January 2021 he popped up as the new CFO for Wightlink, where he remains, along with detailed knowledge of his former employer’s pricing strategies and other insider secrets. Some might consider that concerning when the Island’s lifeline services depend on an effective duopoly, but of course it is all within the rules.
A spokeswoman for the company said: “Red Funnel, like most companies, periodically reviews its board structures and memberships, and the recent change is in support of our fleet replacement programme. We are keen to replace our ageing vehicle ferries to ensure we continue to provide our essential lifeline services for decades to come, and to support residents and visitors alike with modern, greener and more customer-friendly ships.”
As the group made an operating profit of 27 per cent on its turnover of £55.3 million for its ferry operations in 2022, there should be no shortage of buyers, but Islanders must hope that any new ferry purchases are rather more successful than CMAL’s efforts, as Westminster may not be as keen as Holyrood to underwrite mistakes.
Many Islanders believe our interests come a long way down the list of investor priorities and the Island hasn’t fared well when the ferry companies have changed hands in the past. It is clearly time for our elected representatives to step up. The most recent report from competition authorities was in 2009. The government made it clear this week that they have no problems with the cross-Solent ferries and will not appoint a regulator. Is now the right time to seek another investigation?