Renaissance Tangled Web!
Ray Goldenberg
I thought this Reuters story would be of interest. I am fairly
certain that the Renaissance ships were never part of the company's
assets. This has always been my understanding with Ren. This means
that when the few assets are liquidated, there will be very little
left for the creditors like clients and travel agents. This is
because there really was nothing there to begin with except a
marketing company. <:+(
Best regards,
Ray
LIGHTHOUSE TRAVEL
800-719-9917 or 805-566-3905
http://www.lighthousetravel.com
Alstom shares plunge on Renaissance bankruptcy
By Tom Pfeiffer
PARIS, Sept 27 (Reuters)
Shares in Alstom SA plummetted 27 percent on Thursday after the French
engineering and transport company said it was liable for some of the
loans that bankrupt U.S. firm Renaissance Cruises had raised to buy
its ships.
But the French engineering group left investors guessing how much.
The Paris-based company said in a statement issued early on Thursday
that the matter remained ``uncertain.'' When it declined to clarify
the situation further, the shares tumbled nearly 30 percent to a
session low of 18.16 euros -- their weakest level since December 1998
-- as investors attempted in the dark to calculate the effect on
profits.
Alstom shares ended 26.88 percent lower at 18.61 euros, in what was
the largest one-day percentage fall for a CAC-40 component since
telecom equipment firm Alcatel shed 38 percent on September 17, 1998.
With an estimated average value per ship of $150 million, analysts put
the entire value of Alstom's sales to Renaissance at about $1.2
billion. The company did not say how much of that amount it could be
liable for.
``People are trying to work out the full implications of this,'' said
one London-based analyst. ``The questions are what the cash impact
will be and what will be the future implications for the value of the
marine division. We think the cash impact could reach 500 million
euros from Renaissance alone.''
Renaissance, a privately-held cruise operator based in Fort
Lauderdale, Florida, was operating eight 648-passenger vessels built
by Alstom when it filed for reorganisation under Chapter 11 of the
U.S. bankruptcy code.
Alstom said in a statement it had retained ``an interest in some of
the risks and rewards'' of the contracts, which gave it ``ultimate
liability for a part of the long-term loans'' which the cruise company
had taken out to finance the purchases.
Traders said the share decline accelerated in early afternoon trading
as investors began to lose confidence in the company's communications.
LACK OF TRANSPARENCY
Traders said the problem was a reminder of last year's debacle with
Alstom's power station gas turbines, which ultimately led the company
to take a financial charge of 903 million euros.
When Alstom revealed the turbine problems in July 2000, its shares
sank 15 percent in a single session as investors struggled to
understand the financial impact on the company.
``They are giving no details in their press release -- they are
speaking without speaking,'' said one trader. ``It's just like the
turbines affair.''
Alstom said it was working with the ship owners and financial
institutions to find new uses for the ships and ensure that good
market terms and conditions are obtained in any eventual sale.
``Alstom believes it is adequately covered against the possible risks
associated with this matter which, however, remain uncertain today,''
the Paris-based company said.
Alstom Marine accounts for seven percent of the company's orders
received in the last financial year and five percent of its turnover
in the first quarter of the current year.
``Alstom Marine is not a big part of the company in terms of sales,
but it is not sales that are at stake here,'' said one Paris-based
analyst. ``If Alstom has equity stakes in other projects and they go
to the wall, it could take a big hit.''
The financing for the Renaissance sale was arranged by Credit Agricole
Indosuez, while export guarantees were arranged by credit insurer
Coface , according to a report on the Lloyd's List Website.
A spokesman for Coface, whose shares closed down 5.88 percent at 48
euros in Paris, told Reuters the company had no exposure to the
Renaissance bankruptcy because the loans are backed by the state.
The bankruptcy ``has absolutely no financial implication for Coface
because it's based on the state's account,'' a spokesman said.
Though in hindsight an unfortunate choice, the name Renaissance was
briefly apt, given a recent revival in the cruise liner industry which
breathed new life into the St Nazaire yard following decades of
decline and dependence on state aid.
The site, known as Les Chantiers de L'Atlantique, has regained its
competitiveness by pioneering a technique of assembling cabin modules
separately before slotting them into the vessel at a later stage of
production.
Like civil aviation, cruise shipping is expected to suffer directly
from the deadly airline hijack attacks on New York and Washington on
September 11 as people avoid holidaying far from home in such opulent
symbols of Western wealth.
Concern that cruise liners are sitting ducks for any would-be attacker
was highlighted last week by reports that Osama bin Laden had been
planning to use passenger aircraft as deadly missiles to assassinate
President George W. Bush at the G8 summit in Genoa on board two
Festival Cruises ships.
Festival is among Alstom's current customers, in addition to Radisson
Seven Seas Cruises, Royal Caribbean International (NYSE:RCL), P&O
Princess Cruises (quote from Yahoo! UK & Ireland: POC.L) and Carnival
Corp. (NYSE:CCL ).
Shares of Royal Caribbean and Carnival slumped by 67 percent and 44
percent, respectively, in recent days amid a drop in bookings.
Worrying for Alstom, shipbrokers said the two cruise giants were
negotiating with Kvaerner-Masa Yards in Finland to postpone the
delivery of five new ships with capacity for over 15,000 passengers.
(Additional reporting by Noah Barkin, Dominique Vidalon, Pete Harrison
and William Emmanuel)