$22 mln deal to get 80-90% finance from banks
Louis plc is taking delivery of the 850-passenger Orient Queen, the five-star cruise liner chartered by the U.S. Dept. of Defence to evacuate several thousand Americans from Beirut in July.
The deal comes a week after Louis concluded a franchise agreement with Stelios Haji-Ioanou’s easyCruise to operate a low-cost cruise ship in the lucrative Aegean market.
The recently refurbished Orient Queen is expected to enter operation with Louis Hellenic Cruises in the Greek market as soon as it is delivered to the new owners some time this week
Louis is buying the mid-size luxury cruise ship in a USD 22 mln bareboat/hire purchase deal but will probably exercise the option to buy it outright within the initial six-month incentive period, once it finalises the financing. No details were disclosed about the monthly rental until the deal is finalised.
Cypriot and international banks have reportedly expressed interest to provide the financing that is expected to cover 80% to 90% of the purchase value, with the balance paid in cash.
Earlier this year Louis bought the recently refurbished Birka Princess from Finland for USD 35 mln and renamed it Sea Diamond that is already operating as part of the Louis Hellenic fleet with 3- and 4-day cruises in the Aegean. The banks financed about 95% of that deal.
Company insiders suggest that the recent results showed ample funds in the balance sheet and the cash outlay should not concern the shareholders who gain to benefit even more from the enhancement of the Louis fleet to 13 vessels.
The Orient Queen will be included on the Louis plc balance sheet from the second half of 2006 and will be depreciated accordingly.
The announcement said that the lease is for five years but the deal comes with a six month incentive, whereby any monthly fee paid to the previous owner, German-based Orient Queen Shipping Inc., will be discounted from the total value. Any deal after the six-month period will be burdened with interest and other fees beyond the USD 22 mln.
The Orient Queen, with a gross tonnage of 15.781 and 370 cabins, suites and ‘royal’ suites, was fully rebuilt last year at a cost of USD 22 mln. It is 163m long and offers all the modern amenities, such as interactive plasma screens, two pools, Jacuzzi, 4 bars, 3 restaurants, a casino, show lounge, a wellness salon and a fitness gym, helipad, etc.
Its previous owner had hoped to operate the Orient Queen for cruises out of Beirut, but the recent war and the devastation of Lebanon’s tourism industry forced him to change his mind and seek new buyers.
It was chartered by Louis two weeks ago to operate Aegean cruises out of Limassol, as the regular cruise operator to the Greek islands, the Princesa Marissa, had been diverted to serve the humanitarian corridor between Larnaca and Beirut.
Initially launched as the Starward in 1968 for Norwegian Caribbean Line, later Norwegian Cruise Line, she operated out of Miami on 7-day cruises to the Caribbean islands. She was sold to Festival Cruises in 1994, their second ship, becoming the Bolero. In 2000, Bolero was chartered to First Choice Cruises, followed by charters to other travel companies. Following the collapse of Festival Cruises, Bolero became the Orient Queen and underwent a major refurbishment last year.
Louis easyCruise deal unaffected
Louis announced last week that it had struck a major franchise deal with entrepreneur Stelios Haji-Ioannou’s easyCruise to launch budget cruises in the lucrative Aegean cruises market by 2008 or 2009.
The company will probably convert one of its existing ships to easyCruise standards and colours, instead of a great cash outlay or debt to purchase any newbuild that would set the company back by some EUR 35 mln for a 500-passenger vessel.
Once the Louis-owned easyCruise ship starts cruises in 2008 or the latest by 2009, Louis plc will have the exclusive franchise and operation rights in the eastern Mediterranean, and primarily in Greece, even though Stelios may sail any one of his cruise ships into the area before then.
Three of the Louis cruise ships are presently chartered to Britain’s Thomson Cruises, part of the TUI Group, and another to the German Transocean.
Louis operates in the eastern Mediterranean out of its home port of Limassol, from Genoa and Marseilles to the western Mediterranean, and in the Aegean and to Turkey from the Greek port of Pireas as Louis Hellenic Cruises. It also cruises from the London port of Tilbury around Britain and the Baltic Sea, North Cape and the Iberian peninsula.
Louis has pioneered short cruises for the past 20 years becoming the biggest travel company in Cyprus that owns or operates 27 hotels on the island and in Greece, as well as airport concessions in eastern Europe and the Middle East.
