Hans J Marter

30 August, 2007

THE FAROESE ferry Norröna could one day return to Shetland after it abandons the isles next month, according to the islands' representative on the company board.

The ship's owners Smyril Line yesterday (Wednesday) reported the firm was back on even keel after improving its "financial foundations".

The last few years have been troubled ones for Smyril due to high running costs and low passenger and freight volume on its North Atlantic route between Denmark, Faroe and Iceland.

Earlier this year, the company decided to drop Lerwick from its 2008 schedule as part of a cost cutting package. As a result the Norröna was expected to call at Lerwick for the last time at the end of next month.

However the latest news from the boardroom suggests Shetland could stage a comeback as a Smyril destination.

The company management has been in intensive negotiations with its owners, its bank and a number of potential new shareholders.

Yesterday the company issued a statement saying it had found a "new solid foundation, built on a combination of increased share capital and a rescheduled repayment of loans".

The statement gave no figures, but said that two of their main shareholders - Framtak and TF Holding - had converted loans into equity, while Faroese insurance company Royndin and transport operator Blue Water Shipping have become new shareholders.

Furthermore the two largest Faroese banks, EIK and Foroya Banki, had been "very cooperative" in helping to refinance Smyril Line's loans.

Shetland Development Trust (SDT), which has a £4.45 million stake, and Icelandic investor Austfar/Bygdastofnum, have not increased their shares. As a result the SDT share has dropped from 19.6 per cent to around 16 per cent.

The statement said: "The board and the management team of Smyril Line are happy to announce that a very satisfying agreement has been reached and that the outlook for prosperous development of the company is good."

Speaking from Copenhagen airport last night, SDT's director on the Smyril board, Bobby Hunter, said he was hopeful that the company could make a profit in the future.

"The mood is very optimistic in that the company has now far more financial stability than what he had in the past."

Questioned on the likelihood of the Norröna coming back to Lerwick, he replied: "What I am saying is that the future is always open to negotiations. I make no guarantees whether the ship will or will not come back to Shetland.

"But now that the company is on a better financial footing, we could look into the future, and the future would from my point of view include Shetland."