Festival Cruise Ships Arrested

Dan · January 20, 2004

French shipbuilder ALSTOM and other creditors have filed suit against Festival Cruises for non-payment of debts, according to an ALSTOM spokesman.

In addition to European Stars, one other ship is being held in port and the process has begun to stop a third.

"Given Festival's failure to meet its contractual financial obligations, the owners/creditors, including ALSTOM, have launched the process of immobilizing these (three) ships," a statement from the company said.

In addition to European Stars, the Mistral has been held in port at Marseille since Monday, and "a similar process" is underway to stop the third ship, European Vision, which is currently at sea in the Caribbean.

ALSTOM's statement puts the European Stars in the Caribbean and the European Vision in Barcelona, but that was apparently done in error. Festival Cruises said the European Vision is currently between Santa Domingo and Santa Lucia in the Caribbean.

The three ships are the largest cruise liners in Festival's fleet, according to its Web site. The two largest -- European Stars, built in 2002, and European Vision, built in 2001 -- each has a capacity for 1,566 passengers, while the Mistral, built in 1999, has a capacity for 1,196 passengers.

Festival Cruises spokeswoman Maria Asenjo told CNN that the company intended to resolve the dispute the "in the coming hours," but decided nonetheless to pay for the passengers stuck in Barcelona, most Italian and French but including a small number of Britons and Germans, to go home.

The 700 passengers began leaving the ship Tuesday and heading for Barcelona's airport, Asenjo said, adding "I think they will all be home by today."

The ALSTOM spokeswoman, Severine Gagneraud, told CNN that the three ships had a combined value when they were sold of about 784 million euros ($972 million at today's exchange rate), but that they currently have a combine resale value of about 498 million euros ($617 million).

The legal action was taken, Gagneraud said, after Festival got behind on its scheduled payments that were intended to eventually make it the owner of the three ships.

Gagneraud said that ALSTOM has full ownership of the Mistral, a 10.5 percent ownership stake in the European Stars and a 9.5 percent ownership stake in the European Vision. Banks and other creditors hold the remaining ownership stakes.

"ALSTOM's exposure with respect to Festival is 176 million euros," ($218 million), the ALSTOM statement said.

In Barcelona, the European Stars was apparently prevented from leaving when tugboats that normally would accompany the cruise liner out of port were ordered not to provide the service, Teresa Calveras, a spokeswoman for the Barcelona Port Authority, told CNN.

Calveras said the lawsuit involving the European Stars was presented in the Barcelona Investigating Magistrate court, section number 42. She did not know the details of the case.

She said the Barcelona Maritime Captain's office had told the Port Authority to retain the cruise ship.

The European Stars started its voyage in Genoa and arrived in Barcelona on Sunday. It was later to have stopped in Malaga, on Spain's southern Mediterranean coast, and then sail to Spain's Canary Islands, the Festival spokeswoman said.

ALSTOM built the Queen Mary 2, the world's largest cruise ship, which began its maiden voyage this month.