Smyril out of cash

TALKS aimed at resurrecting Smyril Line’s service to Shetland with the Norröna have fallen flat.

Informal discussions had taken place between cash-strapped Smyril and the SIC’s economic development department after the Faroese firm started looking for ways to raise crucial funds.

The company’s new chief executive, Peter Holm, spoke with interim head of economic development Neil Grant shortly after Mr Holm’s appointment in September.

He was told any extra investment would have to tie in with a service to Shetland.

Since then, however, Smyril Line has opted not to pursue the option any further.

Instead the Faroese government has pledged to invest a 30 million Danish kroner (£3.1 million) package into the business.

Shareholder Framtakgrunnurin will also see its share in the business increase by a further £1 million.

Loans worth up to £2.8 million have also been secured to help the company pay crippling instalments on the Norröna.

Mr Grant said he hoped Smyril Line could turn its fortunes round, but admitted the discussions had failed to lead to a deal that might see the liner return to Lerwick.

“I originally contacted Peter Holm when he was appointed chief executive of Smyril Line back in September to ask for an update on what was happening in the company.

“We had several telephone conversations and it was left that if Smyril Line had a proposal which involved Shetland operationally that this should be presented for the council to consider.

“My understanding is that Smyril have pursued other routes regarding recapitalisation of the business.”

The SIC currently has a 16 per cent share in Smyril Line, but that is likely to be diluted by further capitalisation of the business.

“I think it is important the fortunes of the business are turned round for the sake of the value of the shares which Shetland holds in the company and the possible future route opportunities given the great importance of air and sea links to Shetland. If the service ever is rekindled, many say it would need to receive stronger marketing than it has in the past.”