Sark’s government has approved a short-term extension to Sark Shipping’s existing £300,000 loan facility, with days to go before it was due to expire.

The company has used about £270,000 of the loan facility, which has now been extended to the end of November, with Chief Pleas warning it still had major concerns over the firm’s finances and governance.

Policy & Finance (P&F) – the island’s top committee – said the move does not increase the size of the facility or provide any additional public funding, but was necessary to avoid an immediate default while work continues on a longer-term solution.

The committee said it had spent months engaging with the company but had still not received financial information to the standard it expected.

‘Not a vote of confidence’

It stressed that the extension should not be viewed as a vote of confidence in the company’s current position.

Instead, it described the decision as a “short, controlled step” designed to protect Sark’s lifeline ferry link while requiring the company to provide reliable financial information, a credible revised agreement and a clear route towards repaying the capital.

P&F also thanked the company’s crews and office staff for continuing to provide an essential service to the island.

However, it said Isle of Sark Shipping must become “better organised, better governed and better able to meet the island’s needs”.

A spokesperson said: “This is a disciplined and practical decision, but no one should mistake it for satisfaction with the current position.

“Chief Pleas should not have found itself in a situation where such fundamental questions remain about the company’s finances and financial reporting.

“The short extension avoids immediate default and provides time for a revised agreement, including provision for capital repayment, to be proposed in time for Chief Pleas to consider it at the Budget meeting later this year.”

P&F said Chief Pleas would continue to work constructively with the shipping company’s board to address the financial and governance issues that led to the current situation.