The following was published in the September 27 2001 edition of Lloyds List

Renaissance moves into the dark ages By Giovanni Paci and Andrew Spurrier

FORT Lauderdale-based Renaissance Cruises has become the first cruise casualty of the terror attack on New York and Washington. The company and various of its affiliates filed a voluntary petition for Chapter 11 in the US Bankruptcy Court in the southern district of Florida. Renaissance ceased cruise operation with immediate effect yesterday and laid off about 450 employees in Fort Lauderdale.

This could be the first of several casualties in the cruise industry asa result of a downturn in the market linked to the fear of terrorist attacks. Only a week ago, Carnival chief executive Micky Arison suggested that five or six smaller lines could be in trouble as a result of the market downturn. "There are a number of them that may not make it through this period," he said.

It is understood that the decision to file for Chapter 11 has been taken by owner Malvern after its shareholders refused to inject another $110m to keep Renaissance running. Only about $10m was needed to cover higher insurance cost.

An question mark remains over Renaissance's beneficial ownership, but the French government probably bears the greatest losses. Between 1998 and last February, Chantiers de l'Atlantique delivered eight 648-passenger vessels worth about $1.2bn to Renaissance. Market analysts believe Renaissance's outstanding long-term debt linked to newbuildings to be more than $1bn. The newbuilding plan had been financed by a group of banks headed by Credit Agricole-Indosuez under French export guaranties supplied by Coface. Sources indicate that Coface - and ultimately the French government - would now refund banks all the outstanding credit.

Insiders indicate that Alstom, parent company of Chantiers de l'Atlantique, is the beneficial owner of Malvern Maritime, the Isle of Man-incorporated company that this spring poured $80m to rescue Renaissance after a $95m loss last year. It appears Malvern owns about 85% of Renaissance parent R. Holdings, with CSFB Private Equity, the global private equity arm of Credit Suisse First Boston, owning about 5% and the remaining 10% owned by historic investors in the company.

If this is confirmed, the Alstom Group would make a net loss of about $250m, or the equivalent of the ships' cost not covered by export guarantees. This should have been paid by Renaissance at the time of the order but apparently was not. Meanwhile, Alstom would remain the owner of the eight ships built by Chantiers de l'Atlantique plus two older 114-berths cruise ships owned by Renaissance.

If all of this is correct, the Renaissance operation could cost Alstom $330m, including the money poured into Malvern to buy Renaissance. Renaissance said it was making necessary provisions to return any passengers who are on cruises or in transit to home ports. "Renaissance Cruises has very reluctantly elected to seek court protection after exhausting every other avenue to work out a comprehensive business solution," said president and chief executive Manfred Urpsrunger. "In light of the severe, unexpected drop in leisure travel following the terrorist attacks on the US and the immediate and adverse impact on the company's late stage recapitalisation efforts, we concluded that this was the only responsible action we could take."

Meanwhile, Alstom Marine president Patrick Boissier yesterday denied the existence of financial links between the Alstom Group and Renaissance Cruises, adding that the difficulties of Renaissance would have no impact on the group's shipyard, Chantiers de l'Atlantique. "We have no cruiseships for Renaissance on our order book," he said. "There will be no repercussions for Chantiers de l'Atlantique." As regards Renaissance's fleet, he said that he had no reasons to think that would be returned to the shipyard. "The ships belong to structures which are managed by the banks," he said. "It's up to them to take the decisions."

French shipping sources discounted suggestions that Alstom was the power behind Renaissance Cruises and Malvern Maritime. One source was "unable to imagine" Alstom payrolling the cruise company and described Renaissance's collapse as "most unwelcome" because of the "wave effect" it could be expected to have on the wider cruise market.

The Credit Agricole-Indosuez bank, which heads the pool which financed the Renaissance fleet, said yesterday that it was waiting for more information on Renaissance's situation after learning late on Tuesday that it was filing for Chapter 11. A spokeswoman confirmed that the bank had been involved in the financing of the Renaissance ships, although she added that the loans involved were largely covered by Coface.

-- Rich Marsh (marshr@airmail.net), October 06, 2001