Ind: Collapse 'was not my fault', says Sea Containers boss



Collapse 'was not my fault', says Sea Containers boss
Former chairman of failed group blames Government for the high price of
GNER franchise

By Danny Fortson

Independent on Sunday (UK)
Published: 22 October 2006

The former chairman of Sea Containers, the bankrupt transport and
shipping group, has refused to take responsibility for the company's
collapse, instead hitting out at the high price the Government charged
for the GNER rail franchise.

Speaking for the first time since the company filed for bankruptcy
protection last Sunday, James Sherwood also said he had no plans to
forgo his $2m (£1m) severance payment.

Since stepping down in March from the company he founded, Mr Sherwood
has become a lightning rod for criticism by investors. One investor
said he had "blood on his hands".

Mr Sherwood built Sea Containers into a conglomerate with disparate
businesses. In January, he helped recruit turnaround specialist Bob
MacKenzie, who began furiously selling assets, including a ferry line
and 14,000 containers, to raise cash, but it was not enough. The
company filed for bankruptcy protection after it was unable to make a
$115m bond payment. Under the filings, it listed $650m in debts and
just $67m of free cash.

Mr Sherwood told The Independent on Sunday that the company was brought
down by "factors ... completely beyond my or anyone else's control".
Instead, he said, rising fuel prices and the 7 July London terrorist
attacks were to blame.

He denied that the company overpaid when it agreed a £1.3bn offer for
the GNER franchise, but added: "I should also say the Government
required that certain assumptions were used in the franchise bid, like
an annual GDP growth of 2.5 per cent. The Government insisted that
these assumptions be used to obtain the franchise. It's a bit
unfortunate that they may not stand by those assumptions later on."

Sea Containers is currently trying to renegotiate the contract with the
Department for Transport. The UK's GDP growth rate would have affected
the price of the franchise because it influences the rate of growth of
the rail industry.

Mr Sherwood's $2m severance is now a claim in the bankruptcy process.
"I'll get paid at the end of the day. The value of the assets of Sea
Containers exceed the liabilities of the company."

The group's two pension schemes have a deficit of £133m and could be
put into the Pension Protection Fund. Mr Sherwood receives $250,000
annually from his Sea Containers pension in the US


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