Benefactors avert Llangollen financial crisis at 11th hour
TWO unnamed benefactors have pulled the Llangollen Railway back from the brink of a financial crisis.
After Llangollen Railway plc sent out SOS letters to shareholders in February, asking for donations to raise £150,000 and therefore avoid having to enter into a Company Voluntary Arrangement (CVA) to give more time to pay existing creditors, one of them donated £100,000 and the second £70,000. Added to that were many smaller contributions from other shareholders and members.
The emergency appeal was issued after the company experienced two difficult trading years, largely caused by losses incurred in its engineering division.
However, the donations have meant that the CVA has been avoided and has removed the risk of the railway having to raise funds against the two locomotives that it owns, Hudswell Clarke 0-6-0T No. 1731 of 1942 Jennifer or Kitson 0-6-0ST No. 5459 of 1932 Austin No.1, in order to settle debts, with the latter of the pair considered for sale as a result.
On course for Corwen
Now the heritage railway can proceed to a new high point in its history this year – the completion and opening of the new Corwen station.
The SOS appeal letter said: “The board of directors is confident that the company is solvent on a balance sheet basis, in that the assets are greater than the liabilities, but the assets are needed by the business and are not liquid.
“The plc needs to raise £150,000 to continue trading and satisfy some creditors. The Llangollen Railway Trust is also attempting to raise some funds to repay the debt it owes to the plc. By way of incentive we are offering one free travel ticket Llangollencarrog/corwen return for each £50 donated.”
However, following the magnanimous response, the railway’s general manager Liz Mcguinness said: “I would like to thank everyone for their support and donations. We have had a fantastic response from both members and shareholders.
“This means we are now in a much safer position and do not need to put the company in a CVA and we will not be selling or raising funds against either Jennifer or Austin No. 1.
“This has been a very difficult time for the railway, which has been due to historic issues that have come to the surface over the previous 24 months. We now have processes in place to prevent this happening again. I hope we can move forward and continue to make the railway a great place to visit, work and volunteer.”
D49 departs Llangollen
The crisis also led to the Scottish Railway Preservation Society (SRPS) deciding to take LNER D49 class 4-4-0 No. 246 Morayshire back from Llangollen, where it was being overhauled under contract.
A statement from SRPS vicechairman Jim Verth said: “There have been problems about how much the repairs should cost, the quality of some of the work and changes at Llangollen, that have significantly delayed its return.
“Last November we met with
them and drew up a programme of work that, hopefully, would have led to us agreeing how the job was to be completed. This might have involved us taking some of the work back to complete.”
He said that after Llangollen officials told the SRPS that to avoid going into administration, they would return Morayshire in two weeks, a decision was taken to move it, but added: “Having
Morayshire come back to Bo’ness at this precise time would be a logistical nightmare, given the ongoing work of clearing the site in preparation for the Steaming Ahead Project. We are therefore in discussion with a company which may be able to store the
Shire, in a secure place, until we are in a position to bring it back to Bo’ness – perhaps straight into the new shed.”
Liz Mcguiness responded: “The Llangollen Railway and the SRPS entered into an agreement to carry out works on Morayshire some time ago. While both parties have worked hard to honour this agreement, it is clear that the work specification and associated costings did not accurately reflect the true extent of the overhaul required.
“Unfortunately, after a comprehensive review of the situation, we have concluded that it is impossible for us to meet the aspirations of the SRPS without causing significant financial harm to our organisation.
“As a result, we have had no choice but to request that the locomotive returns to the SRPS. We understand that this is not an ideal situation but is in the best interests of all parties. We thank the SPRS team for their understanding and their recognition that this decision has not been taken lightly.”
On March 7, the railway was due to run an eight-coach nonstop train from Llangollen to Carrog hauled by WR 4-6-0 No. 7822 Foxcote Manor with
Austin No.1, as part of efforts to raise funds.
“I hope we can move forward and continue to make the railway a great place to visit, work and volunteer.”