West Somerset Railway General Discussion

Who would actually provide the funding though? and what would they want in return for their funding the purchase of the freehold, a majority shareholding in the PLC maybe , And what if a member of the board was a majority shareholder of that financing firm, you would in effect have a single person, or company owning the PLC. who could then if they so wished sell off non railway required land for redevelopment , or even look at replacing the very large site at Minehead with a smaller one, next to Butlins, and just that one site would probably pay for and make a very substantial profit for who ever owned the WSR at that point

 

I think it has already been established that it will be pretty much it for the WSR if the Plc does become insolvent.

I can't see how, with all the new track that is required, the Plc could have claimed it was in a strong financial position. However, a source of finance like the freehold of the land is something that it might have been judged to be useful to have in any case.

 

If you are borrowing against land, most banks would be happy to lend to you.

 

Useful to have, maybe, but if you don't currently own it is it best use of financial resources to buy it? Unless of course the council sell it at a knockdown rate. Has there ever been any indication that they might be, from the last time round? (excluding comments from dodgy councillors).

 

Would having loans against every asset you own be a good idea?

I deal with a businesses which own nothing, everything is owned by a bank, lease company etc. They regularly close down because they cant keep up with repayments then a new company with a similar name starts up the next day and they go through the same cycle. Fortunately we don't deal with them again when this happens. But if the PLC owned the freehold and went bust because they follow this similar business model, gaining your key assets i.e the freehold, rolling stock and locomotives, will not be as easy as other companies who require more 'white goods' items like vans and lorries.

I would feel much more comfortable with seeing the freehold owned by Somerset County Council or a separate charity as previously mentioned based on this.

 

The value of the land on the open market should be reduced by the fact that there is an outstanding lease in favour of the Plc. However, as the leaseholders, the Plc, if they buy the freehold at that reduced value, can immediately realise the full value of the land as the lease becomes void. The difference is what they can borrow extra money against.

Yup, that's the modern way of business. I am not sure the having an outside body owning the freehold will do much good in the event of the Plc going bust, I think, as I said above, that it would be the end of the railway anyway.

 

But does the modern way of business suit a heritage railway?
Can you go and walk down to your nearest train dealer and lease a couple of locos 70+ years old and 20 odd equally as old carriages? I sure could if I was running say a bus company, or even a mainline TOC, but not with heritage equipment. If they go bust then its going to be incredibly difficult to setup a new operating company and gain all the assets necessary to begin operating.

 

More importantly, how many other businesses are predicated on a large volunteer workforce and subsidised by donations?

 

I am just curious about the financial wisdom of making grand plans in such a financially volatile situation. Saddling yourself with debt is all well and good but this assumes basic things such as the continuation of low interest rates for one, and the general readiness of credit to be available.

It strikes me as reckless in the extreme to be considering this when the ability to survive the next 12-24 months is not guaranteed.

I would have thought that the board should be focussed on one task and one task alone given its magnitude and the scale of threat that it poses to the line - namely surviving Covid.

To be doing anything else makes me question the priorities of the board, and if their priorities are wrongly focussed then you can only question the board’s competence and abilities.

*changes in interest rates would also hit potential customers and while savers may have more money, those with debts will have less. Disposable income activities such as trips out to railway lines maybe the first to be cut back.

 

While I agree with your conclusions, let's bear in mind that the approach to SCC was made before Covid hit, and that the actions of WSR plc (with one notable exception) appear to have been strongly focussed on managing through Covid. Without condoning that exception for one moment, I suggest that no organisation having to deal with Covid has the luxury of being able to do so without some previous distractions.

 

Indeed, although as we know, the WSR was hardly in a stable financial situation beforehand, even if the accounts technically looked a little healthier.

 

Umm....many. lifeboats, national trust, local hospice, Dr barnardoea, trussel trust, political parties (!!) The list goes on. The voluntary sector is huge and are comprised of not for profit organisations, like the WSR.
Ian Coleby

 

It could be that the only way to raise enough funds to stand a chance of surviving is the release of the value of the lease as described. In that case it might be very wise to take on the debt.

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But those organisations have accountable management structures .....

 

Do they? Truly accountable?


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I think that they are set up in such a way as to forestall a power grab

 

Probably. But I do wonder how much the issues of dominant personalities may or could also apply in these other organisations, however they are constituted.


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Indeed, and they all rely on goodwill to a far greater extent than "normal" businesses do.

 

And how many of them have loans taken out against all their assets, or operate under a modern business model?

 

There is all this talk about the Plc buying the freehold when there is an agreement in place with the SCC which, thanks to that FoI request, shows that they intend to keep to it.

So the Plc can't just go and buy the freehold. SCC has agreed that the railway has first choice if they ever decide to sell and that it is the PDG that would nominate which existing body on the railway , or a completely new one raised for the purpose of safeguarding the freehold, should be the purchaser.

I'm also worried that there appears to be two instances referred to in the 'disappearing' letter where the author claims to have had negotiations with the WSRA and the WSSRT and gained their agreement that the Plc should be the one to buy the freehold. Now either this claim is a little excessive, in which case I would have expected the WSRA and WSSRT to have promptly refuted any behind the scenes discussions having taken place, or the claim is accurate. If so it would seem to fit in to the current scenario regarding Washford of the Plc, WSRA and WSSRT forming 'gang of three' and maintaining a stony silence when asked to explain what is happening.

Now I know there is an open offer for members of the WSRA to contact the trustees privately with any questions they may have, which may be sufficient for members. I would ask the management if they think this attitude is going to help gain new members (join our club to get the inside info...?) when many are asking the question "Why should I join when they don't explain what they are doing..." I certainly feel that many ex members will not consider rejoining while this air of secrecy surrounds the WSRA's actions. Just exactly what (or who) is the WSRA supporting at the moment?