Louis Group (LUI) announced that its vessel the ‘Sea Diamond’ sank near Santorini during the early morning hours of 6 April 2007 after it scraped on a reef near the island in the afternoon of 5 April 2007. 1,156 passengers and 391 members of the crew were rescued except 2 French passengers who are still missing.
LUI said it is cooperating closely with the relevant authorities in
The ‘Sea Diamond’ (ex- ‘Birka Princess’) was acquired by LUI in February 2006 for US$35 mln, and according to Management, it was expected to have a material contribution to LUI’s profitability. The ship was built in 1986 and had been fully refurbished in 1999. It had a gross tonnage of 22,412, 584 cabins and 1,537 berths.
The ship was deployed to
According to LUI Management, the vessel is fully insured (including possible sea pollution) and its accident is not expected to have a significant direct negative impact on
LUI’s profitability.
Temporarily, LUI replaced the ‘Sea Diamond’ with another owned ship, while Management indicated that it will try to permanently replace the sunken ship with the addition of another new ship, in an effort to contain any possible indirect negative impact on the Group’s profitability. No other information has been disclosed.
Sharelink Securities & Financial Services estimate however, that the aforementioned accident may have an indirect negative impact on LUI’s profitability through negative publicity, possible cancellations in the future, etc., which currently cannot be assessed.
Sharelink currently maintain our PAT projections on LUI at EUR37.0 mln, including a one-off accounting profit of EUR15.6 mln on the disposal of 57% of the ‘Cyprus Tourism Development Company Ltd’ in February 2007. Sharelink also maintain the price target on the stock at EUR0.71/share. Any possible changes in the near future should not be ruled out, depending on the flow of new information. “Currently we recommend investors to avoid panic selling on the stock, while we envisage that the stock constitutes a buying opportunity at levels below EUR0.50/share,†concludes Sharelink in a report dated April 11.
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