Star Cruises proposes to raise up to US$450m

[Jason]

The world's third largest-cruise company Star Cruises, via its wholly-owned subsidiary, NCL Corp, proposes to raise up to US$450 million (HK$3.51 billion) by offering senior notes to qualified institutional buyers.

The notes, with a principal amount ranging between US$350 million to US$450 million would be used to repay bank loans and for general corporate purposes, including buying new cruise ships. This is the third fund raising exercise for Star Cruises since last October.

Earlier this month, the group signed a seven-year loan pact with 11 lenders to raise as much as US$400 million to help it buy six vessels from its unit Norwegian Cruise Line.

In October last year, the cruise line operator raised US$280 million through a convertible bond and a rights offering to buy more ships and reduce bank loans.

A road show in the United States to market the notes is expected to start today and run to May 5.

Pricing and coupon rates will be determined by the group and JPMorgan Securities which is the sole book running manager upon completion of the road show.

The group has yet to recover from the market downturn. It made a net loss of US$101.44 million in 2003, and in the first quarter of this year the group's net revenue fell by some 5 per cent compared to the first quarter of 2003. The firm said decreased capacity days were to blame and resulted primarily from the Norway unit being removed from service in May 2003.

In the first quarter to the end of last month, the net revenue yields increased by 4 per cent per capacity day and operating expenses decreased by 7 per cent per capacity day compared with a year ago.

However the selling, general and administrative expenses increased significantly during the first quarter this year as a result of increased advertising expenses and start-up costs related to the planned introduction of the Pride of Aloha under the NCL America brand in Hawaii.

As a result of these factors, chairman Tan Sri Lim Kok Thay anticipates that Ebitda (earnings before interest, taxes, depreciation, and amortisation) for the first quarter will be US$6.4 million lower than the same period of 2003.

Due to the scheduled drydockings of the Norwegian Star, Norwegian Sun and Pride of Aloha, which are higher earning vessels, the group expects Ebitda for the quarter ended June 30 to be lower compared with the same period in 2003.