Dead in the Water
Friday, September 15, 2000
Financial conditions at troubled Premier Cruise Line have obviously worsened, as the company is effectively out of business following the seizure of its five ships. In the process, thousands of vacationers have been left stranded.
On Thursday U.S. investment bank Donaldson Lufkin & Jenrette seized the company's Big Red Boats and other ships. Premier chief executive Bruce Nierenberg said DLJ held mortgages on five Premier ships, that the company was behind on debt payments, and DLJ had taken control of the ships with an eye to selling them in order to recover $49 million in debts.
A spokeswoman for DLJ, which controls a reported 80 percent of Premier after restructuring $180 million of debt, declined to discuss financial details but said the Wall Street firm seized five ships after hearing talk other, unnamed creditors of Premier's were considering taking control of the vessels.
The financial moves on Premier, a small competitor in the cruise sector where giants hold sway, forced ashore 2,800 or more Premier passengers in ports at Cozumel, Mexico, the Bahamas and Halifax, Nova Scotia, on Canada's Atlantic coast.
Port authority officials in Halifax said more than 2,000 passengers were grounded after three Premier ships -- the Rembrandt, the Seabreeze and the Big Red Boat II -- were taken over by Sheriff's Department of Halifax.
Passengers said the luxury liners favored by families and older travelers were making their way along the Canadian east coast when the captain told them on Wednesday night the ship would have to dock at Halifax. Some said they were allowed just 15 minutes to gather possessions.
Officials said the third-party owner of the Big Red Boat 2 had decided to end its lease to Premier. A seventh Premier ship, one owned by the company, will continue operating out of Barcelona, Spain, on a lease to a Spanish travel group, officials said in a conference call. Privately-held Premier reported losses of $70 million in 1998 and $20 million last year, according to published reports.
Nierenberg, who 17 years ago founded the cruise operator whose ships once courted families with Mickey Mouse and other Disney characters, said the seizures were unexpected and unwarranted.
"There was no reason to do this now. Nothing had changed about Premier and its operations. DLJ was overly collateralized on the ships. They'll sell them for 60 cents on the dollar and probably make money," Nierenberg said in an interview.
Company officials said it was unclear whether or not Premier would seek U.S. bankruptcy court shelter. A Premier executive said the great bulk of the nearly 270 workers at company headquarters would be let go today. A recording at Premier's headquarters in Port Canaveral, Florida, said the company had ceased all operations and that passengers who had paid for vacations in coming months would be advised on how to seek recovery of their money.