VICTORIA, B.C. - Gambling restrictions and a huge U.S. tax bill have prompted B.C. Stena Line officials to end car-ferry service between Victoria and Seattle and put the company up for sale.
Stena will cease operations Friday, and the company is for sale for $10 million (Canadian), company President Harry Aarsse announced last night.
The closure will put 200 people, most of them full-time employees in Canada, out of work, he said.
The decision to sell the company was made by local executives and those of its parent, Stena Line AB of Sweden, which lost more than $10 million on the enterprise, Aarsse said.
The possibility of a multimillion-dollar back-tax billing from the U.S. Internal Revenue Service and a Washington state injunction banning shipboard gambling farther than 30 minutes out of Victoria killed the operation, he said.
``Market conditions have changed here,'' said Gordon Cross, Stena's director of administration. ``We cannot introduce the total travel-service concept.''
Stena offered the only car-ferry service from Seattle to Victoria.
Its decision leaves Clipper Navigation as the only Seattle-to-Victoria ferry service. The company does not plan to change its passenger-only service, said Darrell Bryan, Clipper's general manager.
Stena bought the money-losing Crown-owned B.C. Steamship Co. in November 1988 for $6 million, to be paid in installments.
The Tourism Ministry released Stena from its obligation to remain in service until October 1991 after the company paid the last $2 million owed the B.C. government yesterday afternoon.
B.C. Steamship assets included the Vancouver Island Princess, the 42-year-old Princess Marguerite, two Victoria waterfront terminals and terminal equipment in Seattle.
The last sailing of the Vancouver Island Princess will be Friday afternoon from Victoria to Seattle. Passengers holding tickets for future sailings will receive refunds, Aarsse said.
He told a news conference that no potential buyers have been identified and that Stena has no deadline on the sale.
The $10 million asking price does not include the Princess Marguerite, on which the provincial government has retained its right of purchase for 120 days from Oct. 4.
Aarsse said the Victoria-Seattle route could be profitable if marketed correctly, but gambling aboard was a major part of making a profit.
Stena brought in a concept new to the route, offering packages with land vacations on Vancouver Island and midnight cruises to Seattle when its flagship, the Crown Princess Victoria, arrived from Europe in April.
The company's troubles became apparent two weeks ago when Aarsse announced the Victoria, which could carry 1,200 passengers and 250 cars, had been returned to the parent company to cut costs in the wake of the U.S. problems.
Coupled with protracted union-negotiation problems in the spring, public outcry - mostly in Seattle - forced Stena to cancel an effort to raise money through the sale of the Princess Marguerite.
The IRS announced this summer it would impose a tax of $3 (U.S.) a passenger on Stena because of the shipboard casinos.
Back taxes were estimated at $2 million to $3 million, although Aarsse said yesterday no figure officially was given to the company. He said the company was trapped by a tax regulation intended for large cruise ships.
Then came a dispute with Washington state, where gambling is illegal, over the location of the international border in the Strait of Juan de Fuca. That, plus a suit from a competitor, resulted in an injunction cutting gambling time to 30 minutes from 90 minutes on each run.
The gambling restriction not only cut Stena's profits, but also the 30 percent of gambling revenues going to the provincial government. The government owned 10 percent of B.C. Stena and used the gambling revenues to pay off B.C. Steamship's debt.