Stena, the privately owned Swedish shipping group, yesterday threw a lifeline to Stena Line, its struggling affiliate, by making a cash bid for the ferry operator which values it at 492 million Swedish krone (€57 million).
It said Stena Line had "suffered large losses in recent years" and its financial position was "very weak".
The move came as Stena Line, a listed company, announced a rights issue of Skr1.5 billion to help cover its losses, service debt and repay a convertible debenture loan of Skr558 million next April.
Stena AB, which together with associate companies owns 53.2 per cent of Stena Line's shares and 78.6 per cent of its votes, said it would support the rights issue in respect of its holdings and might guarantee it.
It would also offer eight krone per share for the outstanding shares in the company.
Stena Line has proved a disastrous investment for shareholders. The company's shares peaked at Skr60 per share in February 1994, but have since plunged as low as Skr5.30 in July this year. The shares are trading well below the level at which they began trading when the company was floated in 1988.
Stena Line is one of the main ferry operators out of the Republic of Ireland, but its main routes are in Scandinavia and Britain. It has been particularly heavily hit by the abolition of duty-free sales within the European Union last year. Rising fuel prices and falling passenger and car transport volumes have exacerbated the position.
The company yesterday announced pre-tax losses of Skr270 million for the first nine months of the year and warned that losses for the full year would exceed last year's 496 million kroner, excluding write-offs. Cumulative losses in 1998, 1999, and 2000 will total more than Skr1 billion.
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