American Classic Voyages Co., which is currently engaged in a high-profile effort to build cruise ships in the U.S., recently provided financial information on its expansion plans and its outlook for 2001.
The 1,212-passenger ms Patriot, the first ship in American Classic Voyages' United States Lines
fleet, just completed a $21 million refurbishment at Cascade General Shipyard in Portland, Oregon. The ship is in Los Angeles for the beginning of a series of inaugural activities that will introduce 6,000 travel agents to United States Lines. The ms Patriot will begin its permanent seven-night Hawaiian Island itinerary with its inaugural cruise on December 9.
Under its Project America initiative, the company's United States Lines brand is constructing two 1,900-passenger ships to begin cruises among the Hawaiian Islands in early 2003 and 2004. The 72,000-ton vessels are now under construction at Ingalls Shipbuilding, a division of Litton Ship Systems, in Pascagoula, Mississippi. In 2001, the company plans to spend approximately $165 million on the construction of the first of the two ships, and approximately $95 million on the construction of the second ship, excluding capitalized interest.
AMCV has received commitments from the U.S. Maritime Administration for financing guarantees of up to 87.5% of the cost of the two Project America ships. The company issued $125 million of one-year floating rate notes earlier this year, guaranteed by MarAd, to finance construction costs of the first vessel. The company plans to continue issuing MarAd-guaranteed debt during 2001 to finance construction costs for the first Project America ship. The company also plans to begin issuing MarAd-guaranteed debt for the second vessel during 2001.
In addition, AMCV, through its Delta Queen brand, is building two 224-passenger U.S. flagged coastal vessels at Atlantic Marine, Inc. in Jacksonville, Florida
. The coastal vessels are designed to resemble classic turn of the 20th century coastal packet steamers. The first of these two coastal ships, the cv Cape May Light, is scheduled to begin service on May 5, 2001. The second ship, the cv Cape Cod Light, is scheduled to begin service on August 4, 2001. The company plans to spend approximately $10 million, excluding capitalized interest, in 2001 to complete construction of the cv Cape May Light and $16 million, excluding capitalized interest, to complete the cv Cape Cod Light.
In October 2000, the company issued $76.4 million of bonds guaranteed by MarAd to finance the new coastal vessels. The bonds bear interest at 7.25% per annum and are due April, 2027.
The company plans to spend up to $3.5 million in 2001 on pre-sailing costs for its new Delta Queen coastal vessels. Of this amount, the company expects approximately $1 million to relate to capital items and the remainder to be included in operating costs.
The company estimates that it will incur approximately $10 million to $12 million in selling, general and administrative expenses incremental to 2000. This amount includes marketing costs for its new coastal vessels and other expenses associated with the company's expansion plans, but does not include the relocation costs described below.
In September, the company announced that it plans to relocate its New Orleans and Chicago offices to Sunrise, Florida in 2001. In connection with the relocation, the company expects to incur up to $5.5 million in employee retention, employee severance and moving costs. The company also said that it may incur lease termination costs and may accelerate depreciation on some of its leasehold improvements. Upon occupancy of the new headquarters facility, the company will become eligible for incentives of up to $3.8 million from the State of Florida, Broward County, and the City of Sunrise. The incentives will include cash payments and tax refunds.