British Waterways Pub Partnership goes bust

Published: Wednesday, 27 April 2011

BRITISH Waterways' beleaguered pub partnership is now in administration, with Lloyds Banking Group appointing Price Waterhouse Coopers as administrators to the Waterside Pub Partnership.

The partnership was the ill-fated venture between Scottish & Newcastle Pub Enterprises and British Waterways, writes Allan Richards.

Grandiose plans

The Waterside Pub Partnership was set up in 2005 with grandiose plans to acquire some 100 pubs, but as narrowboatworld revealed six months ago it had debts of £22m. Furthermore, after its first year's profit of a miserly £16,000, it then produced no return at all.

In 2008/9 British Waterways provided an extra £400,000 of equity to the partnership and forecast profits of £213,000. These actions were taken despite receiving no profit in the previous two financial years! Indeed, in an attempt to increase forecast profit, British Waterways set Operations Director, Vince Moran, a bonus target to raise it by another £50k to £263,000.

Zero profit again

However, it was not to be. At the end of 2008/9, it was zero profit again! British Waterways not only wrote off the £400,000 invested in the year but also some £2.2m invested in previous years. In total, it wrote off its entire investment of £2.6m.

A repeat, in miniature, of British Waterways' Gloucester Quays joint venture where it wrote off its entire investment of some £33m!

Pub sell-off

It was at this time that narrowboatworld also revealed plans by the partners to sell off the majority of pubs, correctly suggesting that the partnership was in financial difficulty due to large debts and poor performance. We also suggested that the waterways would not see any money raised from the sell-off as it would be used to repay part of the joint venture's debts.

However, it seems that the sell-off simply ran out of time. Last month British Waterways was forced to buy 10 of the pubs (which it already half owns!) using £9m of taxpayers money in an effort to reduce partnerships debts. Unfortunately, a new funding package could not be agreed for Waterside Pub Partnership's remaining debt, so administration quickly followed.

Pubs and marinas

One cannot but help compare British Waterways' pubs with its marinas. Both have failed to deliver profits for years and yet  it continues to invest taxpayers money in them rather than the canal infrastructure.

Last year, British Waterways committed to a £4m investment in British Waterways Marinas Ltd to purchase further marinas. It also managed to find £9m to buy ten pubs that it half owns already! That's £13m.

£12.4m less on maintenance

Last year, British Waterways spent £89.2m on maintaining our waterways some £12.4m less than the previous year (£101.6m).

Based on British Waterways' profit record with both pubs and marinas, would it not have been better for it to have invested that £13m in the waterways last year?

Will we see a director or two take responsibility for the collapse of this joint venture by resigning? Don't hold your breath! If nobody will take responsibility for the Gloucester Quays débâcle then pubs are 'small beer'.