Ferry company “Naviera Armas” possibly threatened with bankruptcy

Armas-Ferry-Fuerteventura-Ü

Anyone who has ever visited a port on Fuerteventura has certainly seen a ferry from Armas. The ferries in a white and red design connect Fuerteventura and Lanzarote several times from the port of Corralejo. In addition, Armas runs from Puerto del Rosario and Morro Jable from Fuerteventura to Gran Canaria.

Various Spanish media reported on November 5th, 2020 that the ferry company “Naviera Armas” might be about to go bankrupt. The media refer to the Spanish daily ElConfidencial.

The ferry company Armas is the main means of transport for ferry traffic between the Canary Islands, between the Balearic Islands and between the mainland and the two archipelagos.

Armas is said to have amassed a mountain of debt of over 800 million euros due to the collapse of tourism as a result of the corona crisis.

Now the company is said to have informed its creditors that it will not be able to service the interest coupons on its EUR 282 million bond, which is due for repayment in 2023. The interest on this bond is due at the end of January 2021. The interest payment for another issue of EUR 300 million, which runs until January 2024, will also be due on October 16, 2020 and cannot be serviced.

Armas is said to have hired the investment bank Houlihan Lokey and the consultancy firm Price Waterhouse Coopers (PWC) to find a solution to the critical financial situation. The company reportedly advised its creditors that partial debt relief was necessary.

Armas received an ICO loan of 55 million euros in May 2020. In August 2020 she was able to receive another loan of EUR 75 million. Apparently these two loans are not enough to ensure the survival of the ferry company.

Whether and when the critical financial situation will affect the operational business and thus the ferry connections between Fuerteventura and the other Canary Islands cannot be foreseen at the moment.

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