A £124m deal for government to buy the Steam Packet Company has been agreed, the Examiner has learned.

Treasury Minister Alfred Cannan is due imminently to sign an agreement to purchase the ferry company for £124.3m, subject to Tynwald approval.

It is understood that Tynwald members have been invited to a presentation today (Tuesday) and the proposal is due to go before next week’s Tynwald sitting.

Public ownership aims to bring stability and security to the island’s lifeline ferry services.

It is understood that if Tynwald gives the go-ahead, the newly state-owned Steam Packet will be operated by an arm’s-length company in which the government will have a controlling stake.

A new 25-year user agreement, to be reviewed every three years, will set out minimum service levels and a new pricing mechanism that the government believes will ultimately give passengers and freight users a better deal.

The Examiner has learned that the purchase will be funded from the government’s cash reserves.

Some £76m of the £124.3m will appear in government accounts as a loan to the Steam Packet and effectively replaces the company’s existing debts.

The remaining £48.3m will be equity funding to purchase the shareholding.

It is understood that government will ultimately look at options to refinance the £76m lending.

This could involve the Steam Packet issuing a bond or seeking other bank lending so that the taxpayer investment is repaid.

A fall-back position could see a government bond being issued.

Talks have been taking place for some months now between the Manx government, led by Treasury, and the Steam Packet and its investment bank and hedge fund owners, including Portuguese-based Banco Espirito Santo.

Latest accounts for the Steam Packet Company, filed at UK Companies House in January this year, show the company made a profit before tax of just under £10m in 2016, a turnover of about £50m and had total assets of just over £142m.

Profits of up to £14m were forecast.

It is understood that if Tynwald approves the purchase next week, a second phase of the acquisition will see parliamentary approval being sought within 12 months for the new user agreement and the appointment of two new non-executive directors.

There are no plans, at least in the interim, to seek a new local management structure as the government is keen to ensure a smooth transition.

Potential future investors and partners will also be sought but, crucially, government will retain a controlling stake through preferential shares or a majority shareholding, it is understood.

A third phase of the plan will see the purchase of new ships by 2023 at an estimated cost of £60m to £80m, the Examiner has learned.

This is expected to be funded largely by the Steam Packet itself out of its profits.