TT-Line hits back at Auditor-General’s finding the ferry operator is insolvent

TT-Line’s board contradicts the state’s financial watchdog on insolvency, claiming expert advice proves the company's circumstances make failure “absurd”.

Ken Kanofski chair TT-Line. TT-Line Spirits Project public hearing. Picture: Nikki Davis-Jones

TT-Line has hit back strongly against the Auditor-General’s finding that the government-owned ferry operator is insolvent.

Struggling under the escalating costs of its ferry replacement program and delays caused by the failure to ready a berth in Devonport in a timely fashion, the government business enterprise was given a $75m bailout in the state budget.

Auditor-General Martin Thompson said that in his opinion, TT-Line was insolvent in early July and informed the Australian Securities and Investments Commission of his belief later in the month.

Auditor General Martin Thompson. Picture: Linda Higginson

“I formally formed a view that TT-Line was insolvent, in that the level of debt that they had at that point in time was not likely to be able to repaid based on the forecasts available,” he said.

TT-Line has repeatedly vehemently denied being insolvent. Neither side has budged since.

A parliamentary committee heard on Monday that TT-Line’s lawyers have written to Mr Thompson rejecting his opinion outright.

TT-Line chair Ken Kanofski said that despite the financial challenges of the ferry replacement program and berth upgrades, the board did not agree with Mr Thompson’s assessment,” he said.

“What we’re doing in that letter is voicing our concerns about some of the positions that the Auditor-General set out. They’re our concerns. The Auditor-General doesn’t have to do anything with it. The Auditor General is free to do whatever he wishes.

“We’re expressing our view just as he has expressed his.”

Mr Kanofski said the TT-Line board had no doubts about the company’s solvency.

“We’ve got company directors’ duties, and we take the matter very seriously.

“We’ve taken specialist advice, from a number of leading experts, from leading experts on the matter in the country.

“When you consider the situation as a whole, then the circumstances in which the company could become insolvent appear so remote as to be absurd,” he said.

“We have advice from external experts who do this all day, every day. This is what they do for a living. Their view is we are solvent, and their advice is that we are solvent.”

The new Spirit of Tasmania IV ferry arrives in Hobart after a long trip from Leith in Scotland. Picture: Hype Productions

The newly-purchased Spirit of Tasmania IV is currently berthed in Geelong and the Spirit of Tasmania V in Leight, Scotland – the latter at a cost of around $600,000 a month.

The committee heard the shift had around two dozen crew aboard between them.

They are expected to begin service on the Devonport-Geelong route in September next year once the berthing facilities are ready at the southern port.

Mr Kanofski said TT-Line had gone back to the drawing board to ensure it had a plan to weather its current difficulties.

“We’re redoing the financial forecasts of the business because we wanted to have a first-principles review of those, so that is currently underway, but importantly, that work has been completed for the next couple of years, and we now have a robust set of forecasts for the next couple of years,” he said.

“Those forecasts, in the view of the board and of our external advisers, demonstrate that the business is solvent.

“We’ve been following a structured process to deal with the financial challenges.

And he said he was confident the ferry operator could come to an agreement with the state government about the support it needed to continue on a sustainable financial footing.

“Forecasting the future of TT-Line is complex.

“It involves assumptions about growth market share in both tourism and freight, assumptions about operating arrangements, fuel prices, business improvements and many other factors, where small changes in assumptions can lead to large changes in outcomes.

“Bearing in mind, we’re dealing with vessels here that have a 40-year life and infrastructure that has at least a 50-year life, the board is confident that we’ll be able to reach agreement with the government on a long-term, financially sustainable plan, and that the government will provide financial support if necessary.”