West Cork Tourism Co-Op confident of reaching target
By Jackie Keogh - Southern Star - Saturday February 21st, 2009
There was a heady atmosphere at the West Cork Hotel on Tuesday night as hundreds of people from all over Cork and Kerry turned up to pledge €2 million in financial support for a new ferry service.
Those in attendance were very much aware of the fact that if the pledge drive was successful, the people of West Cork and Kerry would own a majority shareholding in the Cork Swansea service, and would be in a position to determine its operations for years to come.
What was extraordinary about the meeting was that the room was full of people that had nothing but enthusiasm for the proposal – even after the panel of seven legal, shipping and business speakers were quized on all aspects of the plan, especially its economic viability.
Even in a recession, there were plenty of business people, tourism operators and private individuals with their chequebooks at the ready, and an estimated 150 of them signed an investor's pledge on the night, with 50 more signalling their intention by phone, e-mail and fax.
In signing the pledge, each person gave an undertaking to lodge their cheque on or before February 26 next, which would give the co-operative just enough time to buy the ship before it goes to auction.
The new ship – The Julia – is expected to cost €10 million, but it will also need a working capital of approximately €1.5 million, which is expected to be raised from a Business Expansion Scheme.
Private investors – mainly people with business interests in the shipping and freight industry – have already committed themselves to €1.5 million, with an additional €6 million coming from a loan issued by a bank in Finland that has a vested interest in the ship.
The loan offered by the bank is contingent on the new co-operative coming up with an additional €3 million, which the co-operative gave themselves just seven days to raise.
Last week, the group – led by the chairman of West Cork Tourism, Mr. Conor Buckley – announced their intention to enlist three hundred co-operative members at €10,000 each, but by midnight on Tuesday, it was clear that people who couldn't stretch to €10,000 were prepared to raise money as a group, or syndicate.
The €2 million pledged on the night was nothing short of astounding. It spoke volumes for the "can do" spirit of the team leading the initiative and the crowds of people who were willing to back them. It also showed tremendous solidarity among the people of West Cork and Kerry who clearly want this service re-instated.
Speaking on behalf of the organisers, Mr. Conor Buckley said: "Judging from the expressions of interest from tourism and business representatives from Kerry at the meeting, we are confident that our target of €3 million can be raised in West Cork and Kerry over the weekend."
As the master of ceremonies on Tuesday night, Mr. Buckley introduced the speakers and asked the audience to robustly question them about the business plan. He said he was aware that times were tough, but he said that without a ferry service it would get a lot worse.
"If we can raise €3 million from the industry," he said, "We will have the potential to unleash a €250 million dividend over the next five years." On a personal note, he said he would be investing in the project because even in his own home place, in Castlehaven, he could see the absence of yellow number plates – a sign that English visitors are not coming anymore.
Mr. Ciaran Desmond, who is a partner with McGuire Desmond, the legal firm representing the new co-op, explained that the proposed ferry co-operative would be a registered co-op, just like the West Cork creameries, and would benefit the local community.
He explained that being a member of a co-operative is not like having a share in a private company. He said co-op structures essentially abided by the 'one man one vote' principal, and held general meetings, so investors would have a direct involvement.
Mr. Desmond said the ferry co-operative – like all co-operatives – would be governed under the terms of the Friendly Societies Act.
At worse case scenario, Mr. Desmond said that a person's risk would be limited to the amount they invest, but at best case scenario the ferry could become as successful as the former co-operative venture that is Brittany Ferries.
The Mayor of Cork County Council, Mr. Noel Harrington, who has been working on this initiative for many months, pointed out that the Cork-Swansea Ferry service was worth in excess of €35 million annually to the region.
He said the loss of the service was having serious repercussions throughout the South West. And, with expressions of interest already at the €1.5
million mark, the Fine Gael councillor called on people to invest in the ferry and invest in the future of their own businesses.
Using a rugby analogy, he said: "We are in the last minute of the game... one push will see us over the line."
Mr. Harrington described the business plan that has put forward as being "impressive" and he welcomed the €500,000 marketing budget that has been pledged by Cork and Kerry County Councils and Bord Failte.
Mr. Harrington summed up his enthusiasm for the proposal saying: "It is a very low risk investment. It is a no-brainer. And if your business depends on tourism, it is almost mandatory."
Mr. Peter Iles, a consultant with Strategic Transport Solutions International – the company that carried out the business plan on behalf of the Port of Cork Company – illustrated how the Cork-Swansea ferry was "a much superior product" for people in the South West.
He said the ten-hour, overnight ferry crossing – which would run six times a week in summer and four times a week in winter – offered direct access to West Cork, as well as providing an excellent and convenient freight service for hauliers.
The consultant described The Julia as being like a four-star hotel with 340 quality cabins and 850 beds, as well as the facility to hold 400 cars.
Mr. Iles said the ship also has an Irish Bar and lounge, restaurants and a cinema, and has the potential to show a 14% return on turnover per annum from year three onwards.
He said a €2 million annual return was based on 60% borrowings, but in reality the figure would be closer to 50% borrowings, which would put the new company in a stronger position.
He also asked people to bear in mind that the business plan took into consideration that even during its worst years – including the 1980s and not just the Celtic Tiger years – the ferry service carried 40,000 cars and 100,000 passengers.
To break even, he said the new service would have to do 60% of that volume of trade, which is 60,000 passengers per annum and 26,000 cars.
Mr. Iles made the point that the Finish bank has also agreed that the members of the co-operative would – by means of a proper legal agreement – have the 'first mortgage', or 'first charge', on the loan, which would greatly minimise their risk.
The re-instatement of the ferry service would, he added, underpin the viability of the tourism industry in the region and bring long-stay visitors to West Cork and Kerry.
Mr. Iles also addressed the issue of timing. He admitted they were running to "a very tight deadline," but he said there was still time to buy the ship, bring it over, modify it, crew it, form the co-operative, and arrange their sales marketing and booking systems.
He said the people at the top table – especially Captain Frank Allen who would be the new company's managing director – had the experience to run the service and there were already twenty-five hauliers ready to use the new business.
Captain Allen outlined his extensive experience in the business and direct involvement in the Cork Swansea route. He explained how the 1999 management buy-out of the ferry service ran the business successfully up to two years ago.
However, in 2006 he said the company sold their vessel because they were offered a good price for it. He said the sale was done in anticipation of buying a new vessel, but the market was very strong at the time and the company found itself as the under-bidder on the vessel they had intended to purchase.
He said the market conditions at the moment were favourable because The Julia was available at a competitive price; the bank in Finland is both profitable and secure and there is funding available from private investors.
Furthermore, he said there were other economic factors in their favour, such as the price of oil. He said the STS International business plan estimated the price of a barrel of oil at around $120 when in actual fact a barrel of oil in today's market costs less than $40.
Captain Allen spoke about the time the ferry service ran as a chartered operation – at a cost of $18,000 a day – and the number of cancelled sailings, which hampered its economic viability. And he made the distinction that "anyone can operate a ferry service, but it can't be controlled unless you own the ship."
As a majority shareholder in the Cork Swansea service, Captain Allen said the people of West Cork and Kerry would be in a position to determine its operations for years to come.
As the possible managing director of the new ferry service, he said it would be his intention to run it for eleven months of the year, instead of as a seasonal service, and to take one month out for maintenance.
When asked during a question and answer session why the group had left it so late to raise the funds they needed to kick-start their business plan, Captain Allen said they had been fundraising in January, but the banks were not lending.
Captain Michael McCarthy, who is the commercial manger at the Port of Cork Company, was asked why other ferry companies weren't chomping at the bit to take over the Cork Swansea ferry service, and he maintained it is because "they don't want to dilute their own product."
Captain McCarthy also said that as well as over-estimating fuel costs, the business plan had under-estimated the market, which has tremendous potential, especially on a year-round basis.
The same point was made by Mr. John Hosford, who together with Mr. Adrian Brentnall is co-ordinating the 'Bring Back the Swansea Ferry' campaign. He said: "The M4 motorway from Swansea to London is the corridor that will feed the ferry.
"We have the ferry, we have the operators," said Mr Hosford, who urged people to take on board the fact that "this is a very democratic venture that has the potential to percolate right out to the peninsulas in Cork and Kerry."
Many people asked what perk or dividend they would be entitled to as shareholders and they were told that as well as a possible discount on travel – similar to the rates offered by other ferry companies – the company would offer favourable freight rates for their regular customers.
They were also told that there is a tourist office on board The Julia, which could be used to extensively promote and market the region during the ten-hour ferry crossing.
Mr. John Young of Courtmacsherry said that in the space of a couple of hours they had rounded-up enough investors to buy three €10,000 shares. He said: "We, the people of West Cork, should support this if we are to survive and thrive."
Mr. Toby Campbell, chairman of Bantry Town Traders Association, said that there are over fifty people in Bantry willing to buy thirty €10,000 shares. He said: "People have joined together and are doing what they can to buy as many shares as possible because they realise that the service is badly needed."
Bantry town councillor, Mr. Aiden McCarthy paid tribute to West Cork Tourism for the leadership they have shown on this issue and asked them to consider rowing in behind other initiatives to promote West Cork.
Councillor Robert Walsh spoke on behalf of Clonakilty Tourism. He said they were aiming to enlist one hundred of their members to buy ten shares, which – if they availed of the Credit Union loan offer – would cost each member approximately €5 a week for five years.
Mr. Donal Kelly of Castletownbere asked about the relationship between the co-op and the company and Mr. Desmond explained that the co-op would invest in the company and would have a direct stake in the company.
Mr. Jerry O'Grady of the Killarney Tourist Development Company Ltd paid tribute to West Cork Tourism for the excellent job they were doing, but expressed some concern that Kerry was being left outside the pale.
He said there were plenty of businesses in the Kingdom that would row in behind the campaign to re-instate the ferry service. Mr. Power said he had highlighted the issue on Kerry radio and had spoken to some Kerry investors at the meeting in Castletownbere.
Mr. Conor Buckley said they didn't have the time over the last seven days to organise any meetings in Kerry, but they will be running a campaign, this weekend, to enlist the support of the people of Kerry to raise the €1 million shortfall.
Councillor Michael Healy Rae had something to say about the jobs going to Polish workers, but Captain Allen said the former crew members were all "highly-specialised" workers who has been trained to work in vessels all over the world.
Councillor Donal O'Rourke said West Cork needed to re-establish its connectivity with the M4. He said it was imperative that the West Cork region gets in contact with the British and EU highway.
Councillor Joe Carroll asked whether the ship could be sold again and Captain Allen said that if that happens it would be a decision that would rest with the co-operative. "In other words," he said, "It can't be sold unless you decide to sell it."
Mr. Michael Kingston, who is standing for election as a Fianna Fail candidate in the Bantry Electoral Area, said he was, at first, sceptical about the fundraising campaign.
But, after examining the business plan, the lawyer, who has a background in marine law, said he was satisfied that the prospects were quite good. As an investor, he said he and his family regarded it as "a safe investment because the shareholders have the first charge on the loan."
Mr. Noel Murphy of the Castletownbere Business Development Association informed the meeting: "We are the furthest out, but we are also coming to the table."
Although nothing is finalised until everything is finalised, Captain Allen said there still is time to secure a new ferry service, but he said: "It really is make your mind up time."
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