TT-Line is likely to need ongoing government support for years to come, with meaningful debt reduction not expected until the early 2040s and full repayment forecast by 2052.
Tasmanian Public Finance Corporation (Tascorp) chair Gary Swain told a parliamentary committee today it was “highly likely” the Spirit of Tasmania operator would need continued government equity.
“I think that’s highly likely and that’s why the forward estimates reflected equity payments for the next 3 years,” Swain said.
“We are talking about a business that will have a high level of debt for a considerable period of time and will have to be monitored very carefully by the lender in Tascorp,” he said.
Swain said Tascorp’s position had been that the business carried more debt than it could comfortably manage under its revised financial model.
“Tascorp was very clear that the business needed some additional equity support from the government and that was a condition to the $200 million extension,” he said.
TT-Line currently carries about $1.145 billion in debt, made up of $990 million in existing borrowings plus about $155 million drawn from a $200 million facility.
Tascorp CEO Heath Baker said that figure should fall below $1 billion by the 2030 financial year as the final equity injection comes through.
“I’m a bit hesitant because, as I say, these are first draft numbers. These are only management numbers. These have not gone to the board,” Baker said.
The committee heard TT-Line has received $75 million in equity so far, with a further $200 million expected in coming weeks.
Part of that will finish outstanding works at East Devonport and the remainder will retire debt.
Asset write-downs for the 2025-26 financial year could exceed the $275 million in total equity injections.
That is because the write-downs apply at 30 June while the $200 million arrives this financial year.
Asked whether the write-downs would be that large, Baker said “that is our understanding.”
The write-downs cover both new vessels, both older vessels and both berths.
Swain said a write-down figure did not translate directly into the cash the business needs in any given year.
“There’s not a one-for-one relationship, as I understand it, between the write-down number and the level of support the business needs,” he said.
TT-Line advised Tascorp in October 2025 it was highly likely to breach its interest coverage covenant and might exceed its financial leverage ratio.
That ratio requires debt to stay below 75% of assets. No formal breach notices have been issued and the covenants have not been reset.
Tascorp is awaiting audited financial statements and updated 30-year forecasts before finalising its credit review.
A decision is expected at its 30 September board meeting or in October.
Baker said the base case has TT-Line fully repaying its debt over 25 years, leaving a further five years to build reserves towards replacement vessels.
“If they can deliver the outcomes that they are projecting in their longer-term financials, we are comfortable on that basis,” he said.
“There is a high probability that they can service and repay the $1.2 billion worth of debt.”
The original 2017 business case had the debt repaid within 12 years, forecasts Baker said looked very optimistic at the time.
Asked whether TT-Line could keep running with that level of debt, Swain said the company would be “constrained in what they can do from a capital perspective.”
Swain declined to say whether TT-Line remains solvent, saying that was a matter for the company’s directors.
“We have to form a view that they’re capable of meeting their debt payments to Tascorp and I think we have that confidence supported by the guarantee from the government,” he said.
He said his understanding was that the directors still considered the company both solvent and a going concern.
Swain said he was not aware of any Tasmanian government-owned entity ever being allowed to go into liquidation, insolvency or administration.
The government guarantee on TT-Line’s borrowings stands at $1.445 billion.
The corporate regulator ASIC has written to the committee confirming an audit breach report on TT-Line was lodged in July 2025 under section 311 of the Corporations Act.
It has asked the company’s auditor for an update, including on the 2026 financial year audit.
