’I think it’s a very good deal for the Isle of Man,’ Chief Minister Howard Quayle has insisted.

Speaking ahead of today's key Tynwald debate on government plans to take the Steam Packet into public ownership, Mr Quayle defended the timing and cost of the £124.3m deal.

And he denied the taxpayer was paying off the Packet’s debts.

He told iomtoday: ’The value of a company is not necessarily only its physical assets, it’s what it will generate over a certain period of time.

’The company is valued at £124m that’s what we are paying for. That’s nothing to do with their debts.

’They will pay their debts off. No debts that the Steam Packet have will roll over to us.

’How we structure the purchase is entirely different. A well-run company normally has some form of debt.’

Mr Quayle likened the situation to buying a house: a purchaser buys the property for the price they believe it is worth and is not concerned over how much the vendor still has to pay off their mortgage.

If Tynwald gives its approval this week, government will buy a 100% shareholding of MIOM Ltd, the Packet’s parent company.

The maximum cash payment of £124.3m will be reflected in government accounts as a share purchase of £48.3m and a £76m loan.

Options will be considered for future refinancing of the £76m government loan.

Mr Quayle said government had employed ’some of the best professionals’ to look into the deal on its behalf.

He said Tynwald members had been provided with confidential reports from financial experts explaining how they had valued the company, and also a specialist report on the state of the current fleet.

The politicians have signed an agreement not to disclose any confidential documents, Mr Quayle said.

But he said those reports that could be, would be made public.

He said the Packet was making a healthy return on capital of 8 to 10%.

Mr Quayle said he had always supported the idea of taking the Steam Packet into public ownership but had initially questioned the idea of purchasing it before the user agreement ran out in 2026.

But he said he was now convinced the time was right.

He said if the user agreement had been extended, the company would have been sold on and laden with new debt.

’We had to stop that happening again,’ he said.

If the agreement had not been extended, he said, there was a risk the Steam Packet would be just run for cash, with no investment in services or fares for the next seven years.

Mr Quayle revealed there was still a question over the exact size of the pension liability.

He said a shortfall of £5.1m in the staff pension scheme had been identified but the government advisers had concerns the figure might be higher. As a result, a sum of £1.3m will be held back from the purchase price, to be paid if it is confirmed that the lower valuation of £5.1m is correct.