Kloster Reorganizes

Knut Kloster Jr., the new Chairman and CEO of Kloster Cruise, has reorganized the company into three separate divisions and said that he will not sell any parts of the company nor any of its ships.

Kloster Jr. also said that plans call for more newbuildings. “The cruise market is growing,” he said. “Of course, we will build to maintain our market share.”

Three Separate Divisions

Kloster Cruise has been reorganized into three distinct divisions – Norwegian Cruise Line, Royal Cruise Line, and Royal Viking Line – with three presidents responsible for the profitability, sales and marketing of their respective division.

Doug Falk has been named President of NCL. He was formerly Executive Vice President of Marketing and Sales for Kloster Cruise.

Spencer Frazier has been named President of RVL.

He was formerly Vice President of Sales and Marketing for RVL.

Jim Naik retains his position as President of RCL.

In addition, Svenn Dahl has been named Executive Vice President of Kloster Cruise with responsibility for all ship and hotel operations.


The apparent reversal of the former management’s centralization which started in 1988, when RVL was moved to Miami and merged into the NCL organization, comes shortly after Kloster Jr. assumed the helm succeeding Trygve Hegnar, former CEO, and Hans Golteus, who was President.

Interestingly enough, Kloster Jr., has also been quoted as saying that he is imposing RCL as a model on the two other brand names. RCL, which was acquired by Kloster Cruise in 1989, has remained largely autonomous in San Francisco.

Kloster also said that he wants to bring the company back to its basic business: creating a good product and selling it as effectively as possible. He has promised that there will be more emphasis and resources devoted to marketing and sales.

Shipboard officers and staff will also operate with more autonomy and authority while reporting procedures have been streamlined.

Kloster Jr. has also indicated that the previously proposed initial public offering (IPO) may be delayed or abandoned. Kloster Jr. said that an IPO was only one of several options they company might pursue.

“We may not go through with an IPO,” Kloster Jr. said. “We will only do an IPO when and if we decide the time is right. We are also looking at other options,” he added.

Kloster Jr. also denied that he has plans to sell any parts of the company nor any more ships. The former CEO, Hegnar, had previously said that he was considering selling half of Kloster Cruise to avoid new, increased Norwegian corporate taxation.

Kloster Jr. was also recently quoted as saying that if the company needs additional funds it is better to invite new partners than to sell ships. “It is important that the travel market is confident that we will keep our fleet throughout 1993,” Kloster said.

Debt Burden

In spite of company reassurances, analysts continue to express concerns about the debt of Vard, parent company to Kloster, which totals $800 million including $600 million for Kloster Cruise, and represents 82.7 percent of Vard’s capitalization.

While the company estimated its value at about $850 million in the annual report for 1991, the current share price of NOK 39 puts the value at $230 million, about one fourth of the company’s own estimate of its worth.

Over the next five years, Vard’s debt service will range from $50 million due in 1992 up to $119 million due in 1995. In addition, two loans come due in 1993, requiring payment of an additional $123 million to the Industrial Bank of Japan, and $138 million to Den norske Bank in 1995.

A downwards slide of Vard’s shares, which reached NOK 30 in recent weeks, was recently reversed as the stock climbed back up past NOK 40. At press time, Vard traded for NOK 39. But this is still way off the company’s own evaluation which estimates share value of about NOK 160.

In the first half of 1992, Kloster Cruise posted a loss of $200,000 in operating income on estimated revenues of $400 million.

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