The Chair of Australian passenger vessel operator TT-Line Company has disputed an assessment by Tasmania's Auditor-General that the company has become insolvent.
Speaking at the Tasmanian Parliament earlier this week, TT-Line Chair Ken Kanofski said it is "absurd" for the state's Auditor-General Martin Thompson to declare that the company has been insolvent since August of this year.
Mr Thompson's assessment of TT-Line being insolvent came after the company's borrowing limit was raised to AU$1.4 billion (US$910 million) from the earlier limit of AU$990 million (US$650 million) and prior to a AU$75 million (US$49 million) equity injection by the government.
"I developed reasonable grounds to suspect that the company would not be able to meet its longer-term debts that fall due after the relevant period," Mr Thompson wrote in his report, which has since been submitted to the Australian Securities and Investments Commission.
Mr Kanofski said it would be incorrect to determine whether TT-Line Company was solvent when using long-term debt repayment capacity rather than short-term debt repayment as a basis.
Mr Kanofski told legislators that, "any company that's looking to refinance its debt or raise equity in the future would be insolvent," if such a basis were to be used.
Lawyers representing TT-Line have also responded to the Auditor-General's assessment, saying that it is "misconceived" and, "causing real harm to the company and its stakeholders."
Mr Kanofski, who was appointed Chair of TT-Line as part of a recent restructuring, had earlier said that the company, "has more assets than liabilities," and that it is continuing, "to work on developing a range of long-term financially sustainable options for the government to consider."
The insolvency declaration comes as TT-Line Company, which operates under the Spirit of Tasmania brand, continues to face scrutiny over a ferry replacement program beset by delays, cost overruns, and technical issues. As a result, two of the company's new ferries that were intended to be operational by 2024 are now scheduled to finally enter service in 2026.
"As I keep saying, governments should not be in the ferry business," Dr Neil Baird, Baird Maritime Co-Founder and ferry safety advocate, wrote earlier this year.
"It is a business that requires the best of free enterprise talents. It has been proved over and over again that bureaucrats do not possess those talents, no matter how smart they think they are. Their mistakes can be incredibly expensive and they, obviously, never have to wear those costs."