Question marks still hang over the future of troubled SNCM

Question marks still hang over the future of troubled ferry operator Société Nationale Corse-Méditerranée (SNCM).

SNCM has now been partially privatised with Butler Capital Partners holding 38% of the company, Veolia Transport 28%, and SNCM employees 9%.

However, the state, through Compagnie Générale Maritime et Financière (CGMF), still has a 25% holding, and the EC has decided to extend its investigation into "subsidies" granted to SNCM under the plan and determine if they are compatible with European rules on state aid. The subsidies had been granted prior to the partial sell-off.

A spokesman for the EC says it will have to decide "whether or not CGMF and the French state could be considered to have acted as well-informed investors in respect of those measures".

The EC also doubts "whether financial assistance was kept to the absolute minimum required for restructuring SNCM, whether SNCM contributed enough of its own resources to the restructuring process, and whether the restructuring plan can actually secure the long-term viability of SNCM".

Switching allegiances As if this was not enough, August saw SNCM's long-time partner Compagnie Méridionale de Navigation (CMN) quit to join forces with rival Corsica Ferries, thus sparking another row.

The new pairing is bidding for the renewed concession on subsidised services between the French mainland and Corsica, and represents a setback for SNCM's prospects.

CMN and Corsica Ferries indicated they had not made a joint bid but had co-ordinated their separate bids for the concession, which is due to come into force at the start of next year.

CMN, which shares the existing five-year concession with SNCM, confirmed it would not be bidding with its traditional partner, apparently in the belief that the new owners of SNCM were intent on taking over CMN rather than continuing to co-operate with it.

SNCM has accused its former partner's majority shareholder, Stef-TFE, of breaching a shareholder pact between them and the matter has now gone to court. In the absence of a renewal of its partnership with CMN, SNCM has said it intends to bid for the concession alone, although it is thought unlikely that it can win it without CMN's three ro-pax vessels.

The service concession itself is not without controversy.

Francis Lemor, the boss of StefTFE, says SNCM would have to give up its 45% stake in CMN in order not to breach European competition rules.