THE stark, unequivocal message from shipping and transport, company, Irish Continental (ICG) was clear enough. The carrying value of its 25 per cent shareholding in Bell Lines "is now Nil". This followed the provision of £1,597,000 against the subordinated loan it had made to Bell when the investment was made in 1993.

This immediately begs the question has Bell Lines no value? And by giving the N a capital status, was it making a particular point?

The approach adopted by ICG is probably ultra conservative. It has obviously taken a prudent accounting view. Indeed, it has publicly expressed confidence that a restructuring will turn Bell into a viable business.

But this management buy out has proved to be very expensive so far. It will take a lot to reverse that experience.

The knock taken by ICG was highlighted in last week's accounts. On top of the provision, its share of losses from Bell Lines came to £1,585,000.

It is not known how the other shareholders have treated their investments in Bell but they must now have a lower value. Two venture capital funds, NatWest Ventures and CVC Capital Partners, each with a 30 per cent stake, have the most to lose. But the management, with a 15 per cent shareholding, is also sharing the pain.

The management which had high hopes in 1993 will now be looking for a reversal in its fortunes. Two of the events which hit the company were outside its control. The third is being addressed. Bell Lines, in effect, has had to contend with hits from three sides.

First, it experienced operational difficulties in the first half of last year when Eurocontainer Shipping, a shipping company from which it had chartered four ships, went into examinership. As a result, it had to arrange other charters.

Eurocontainer Shipping, originally part of Bell, disconnected itself from Bell following a MBO. This was partly financed through a £1 million loan from Bell.

However, it will get most of this back. Around £750,000, will be repaid following a High Court approved restructuring of Eurocontainers Shipping which has since resumed trading.

Second, the two cranes at its Waterford Terminal were damaged. While it was covered by insurance for the damage, it was not covered for loss of profits.

Third, competition from the Channel Tunnel, has adversely affected many shipping transport companies, including Bell Lines. Reduced transport charges have cut deeply into Bell.

These are now being addressed. Rationalisation had cut costs by £2 million and integrating its businesses has given it a better focus. Excluding rationalisation costs, Bell Lines is now budgeting for break even (before rationalisation costs) this year. It hopes to be back into profits in 1998.

But all this is depending on a restructuring involving both creditors and shareholders. The final shareholder structure will not be known until agreement is reached between the different parties. However, if a large injection of new equity is required from the existing shareholders, then the percentage shareholding could well change.

ICG as a publicly quoted group which has lost heavily on its original investment will have to be particularly vigilant. By doing nothing it will not disimprove its financial position. It has already written off its investment. While its share of losses from Bell Lines has affected its net profits, it has not, and will not impact on cash flow.

Once it decides to stay in, and that must mean putting in more equity capital, it will be committing more of its shareholders' funds. But it is hard to read the mind of ICG which is a most uncommunicative group. It is audacious enough to do something unpredictable. Indeed, audacious could be too mild a word as other publicly companies last year could only look agog at ICG as it asked the Government to give it a handout to keep one of its winter routes open.

ICG has not had a good record in boosting sales - it only grew by 17 per cent in the past three years. However, it has managed to boost profits considerably with earnings almost doubling in three years and this has led to good dividend growth. This trend is set to continue, but its outlook will be coloured by the stance it takes with Bell Lines.