Moby, all disasters
The Moby crash is worth 200 million: all to banks and bondholders. Fabio Pavesi's article for Affaritaliani.it
To lose weight (and a lot) to survive, but above all to make banks and bondholders pay for their missteps. This is all about the ongoing arrangement with creditors presented by Moby, the ferry company of the Onorato family. The step of the concordat is the only inevitable move to avoid a crash that is now more than evident.
Only in 2019 Moby closed a terrible balance sheet. A net loss of 198 million on a turnover of 271 million with a net worth of 145 million. And thanks to Covid, the data (the latest available) in June 2020 have further worsened. Revenues for the half-year collapsed to 65 million with a loss that rose to 298 million and finished assets below zero for the monstrous figure of 444 million.
THE DISASTER THAT COMES FROM FAR
A disaster from which one can (perhaps) escape only with a shock treatment. The agreement provides for the sale of the tugboat division as well as 5 ferries in the fleet. But obviously the sale is not enough to pay off the maxi debt accumulated over time which alone is worth 460 million financially, of which 160 million pertaining to the banks and 300 million are the Luxembourg bond maturing in 2023. Without cash flows those 460 millions of financial debts cannot be repaid.
THE REFUGE IN THE CONCORDATO
And so the Onorato family can only take refuge in the pending settlement by asking banks and bondholders to renounce part of their exposure. A sacrifice that is worth more than half of the resources granted by banks and bondholders. Between privilege and unsecured debts the banking class should return 73 million on the 160 of exposure, while for the holders of the 300 million bond, only 147 million should be repaid, if the plan is successful.
In total on a total debt exposure, in addition to banks and bond holders of 536 million, the repayment plan over time should guarantee 255 million no more. It is the sacrifice that is always asked of creditors when a composition plan is proposed.
THAT ERROR OF THE DEBT PURCHASE OF TIRRENIA
Yes, but why did the largest Italian shipping group end up in such shallow waters? The family blames the crisis for the pandemic and ruthless price competition by the Grimaldi Group. But the reality is quite different. To make Vincenzo Onorato's company go upside down, more than Covid and the market, it was a serious venial sin.
Having borrowed heavily back in 2015-2016 to take over 100% of Cin, the Italian shipping company, which had taken over the former Tirrenia in extraordinary administration. The original sin is called Leverage buy out, that is to say having got into debt to acquire the former Tirrenia and therefore market shares. A very reckless stride of the leg when read in retrospect.
IN 2016 FINANCIAL STATEMENTS ALREADY LOADED WITH MAXI-DEBT
In 2016, Moby's balance sheet changed dramatically. The company is charged with 300 million euros of debt by virtue of the issue of the bond. Liabilities in just one year double to 611 million from 284 million in 2015. A nice weight for a group that makes just under 250 million in revenues, with a gross margin of only 46 million. That boulder loaded by the Onorato on the shoulders of the Moby ferries will end up ballasting the company forever.
Which has to pay interest on the debt that alone put the net operating margin in red, at a loss for the first time. Since then, thanks to low-toned revenues, Moby will continue to make losses, up to the record gap of 198 million in 2019.
MOBY, THE FAMILY ATM
But the patron Vincenzo Onorato also gave us his. In the memorandum accompanying the proposed agreement, the passage of money between Moby and the Onorato family is retraced.
Relations between related parties are not always clear. Just to mention a few transactions noted in the memory, here is the purchase by Moby in 2017 of a property in Piazza San Babila in Milan for 7 million euros in the name of Vincenzo Onorato. Money transfers of uncertain nature from the company to Onorato for 232 thousand euros. And again the maxi-remuneration to members of Moby's board of directors, including Vincenzo Onorato himself, in the period 2015-2019, much higher than comparable companies. And again the payment of luxury cars for 600 thousand euros; the fees of a jet available to managers.
THE MOBY-CIN-BROTHERS ONORATO TRIANGULATION
Finally, there are triangulation relationships between F.lli Onorato, a company established in 2017 by the sons of Vincenzo, Alessandro and Achille, Cin and Moby itself in hull rental. As reconstructed by the drafters of the concordat in the 2015-2019 period when the Moby crisis began to reveal itself and worsen with each passing year, Moby itself received from Cin and then transferred to F.lli Onorato resources for 47.8 million euros . Money gone to the family company.
MONEY IN GRILLO AND CASALEGGIO
Not only that, but Onorato financed political parties and movements with company money: Beppe Grillo srl had an advertising contract worth 120 thousand euros per year for 2 years; 600 thousand a year to Casaleggio Associati; another 400 thousand euros to various political parties; 2.8 million to the private jet company; 600 thousand euros of luxury car rental. Always money coming out of the Moby coffers.
A FEW SMALLS THE SACRIFICE OF THE FAMILY
Now that the disaster is complete, the president Vincenzo Onorato has decided to renounce his remuneration as chairman of the board of Moby equal to 3 million per year for a period of 4 years. And the family, through Onorato Armatori srl, the sole shareholder of Moby, will participate in the sacrifice for the rescue with 2 million euros.
A merely symbolic sacrifice of a few tens of millions of euros by Onorato and his family. A drop in the sea of 460 million in financial debt to satisfy the thirst for acquisitions, in which the former queen of ferries has long been drowning.
Article published on Affari Italiani, here the full version .
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/moby-tutti-i-disastri/ on Sat, 17 Apr 2021 05:09:34 +0000.