Parent company of Windstar Cruises sheds assets in bid to avoid bankruptcy

mercedes · April 22, 2009

The parent company of Windstar Cruises has announced the quick sale of its travel and events division as it maneuvers to avoid a bankruptcy filing.

In a statement issued Monday, the financially struggling company, Ambassadors International, said the sale of the division to a private equity fund would be effective as of last Thursday.

"The board and management are pleased to have completed this transaction," Ambassadors CEO Art Rodney said in the statement. "We will continue to focus all of our capital and efforts on Windstar Cruises and the small ship luxury segment."

Ambassadors' businesses have been hit hard by the economic downturn, and the company warned last week in its annual 10-K filing with the Securities and Exchange Commission that it may not be able to continue as a going concern if it isn't able to to sell assets, get additional financing and/or renegotiate its debt.

As part of the filing, which was submitted late, Ambassador's independent accountant, Ernst & Young, warned it had "substantial doubts about the company's ability to continue as a going concern."

Ambassadors, which also owns a marina business, reinsurance operations and the now defunct Majestic America Line, has put all of its assets with the exception of the Windstar line up for sale.

Ambassadors shut down the money-losing Majestic America Line in November after failing to find a buyer for the business. The line's boats are being pulled out of the water and put into long-term storage.

"Due to the current global downturn in the economy, specifically the decrease in vacationers’ discretionary spending and the direct impact this has on the reduction in cruise bookings, decrease in corporate spending on incentive programs and the tightening effect of the credit market on financing for construction projects, we will need additional sources of cash in the immediate future in order to fund operations in 2009," the company explained in the 10-K filing.

In a sign of the cash crunch at the company, Ambassadors failed to make a $1.8 million interest payment due on its debt last Wednesday.

UPDATE, 5:15 PM ET: Ambassadors was paid $500,000 for its travel and events business, the line disclosed late today in a filing with the U.S. Securities and Exchange Commission. The buyer of the business also agreed to assume $3.8 million of the company's liabilities, according to the filing.