Star Cruises Orders Coming

Star Cruises has placed $80 million worth of shares through DBS Asia Capital Limited and DBS Vickers Securities (Singapore) to be used for fleet expansion and corporate purposes.

Said Dato KT Lim, chairman, president and CEO of Star: “Following a period of consolidation last year and the strong improvement in our business in the first quarter of this year backed by the strong booking trend, we believe that the cruise industry is experiencing an earlier than expected resurgence.

“Further, our expansion into the North China region in the wake of a more open Chinese economy reaffirms our commitment to further develop the cruise industry in China,” Dato Lim added. “This has warranted a review of our fleet profile to ensure that the most suitable ships are positioned to meet the different demands of the various markets.”  

In Miami, Colin Veitch, president and CEO of Norwegian Cruise Line (NCL) and Orient Lines, said only that the company was always talking to shipyards and that we should make no assumptions regarding newbuilds. Meanwhile, the funds will strengthen the balance sheet, he said.

Sources, however, suggested that Star is close to placing an order with Meyer Werft for two newbuilds, one for NCL and one for Star, at $350 million each, although other sources believe both ships will go to NCL. Sources also said that a unique design feature of the ships would be multi-deck promenades similar to those aboard Royal Caribbean International’s Voyager-class, but positioned on the sides of the ship, rather than in the middle.


Veitch attributed NCL’s solid first-quarter results to a 40 percent increase in capacity and careful cost control.

“We were spending a lot of money in 01,” Veitch said. “We introduced new ships, we improved our maintenance and introduced new marine procedures.”

Regarding 02, Veitch would only say that he was cautiously optimistic. “The year looks a lot better now than we thought it would last fall,” he said, noting that NCL and Orient Lines have enjoyed a strong wave period.

But while Veitch said he was “quite pleased” with the bookings, they are still down a bit from last year. And with yields down, he has to pay a lot more attention to costs.

Veitch also said that the Caribbean was getting a little soft with more capacity in the market this summer than last year. He said that the two big lines have held capacity back expecting prices to rise.

NCL is offering a second season of cruises to the Bahamas from New York on the Norwegian Sea, which Veitch described as building up nicely. Next year, the new and larger Norwegian Dawn will take over that program. With a higher speed, the Dawn will call in Nassau, at NCL’s private out-island Stirrup Cay, Miami and Port Canaveral.

While other cruise lines have announced record ship deployments in Europe in 03, Veitch said that NCL and Orient Lines would maintain their 02 presence with one ship and two ships, respectively. Instead, Veitch will focus on building up the company’s “home land” cruise programs.

NCL’s Freestyle concept is doing well, according to Veitch, who added that the program is offered on all NCL ships except the Norway.

Star Valuation

The $80 million has been raised through the issuance of 189 million shares at HK$3.30 per share. The Lim family controls approximately 84 percent of the shares through various companies and trusts, while less than 11 percent are held by other shareholders.

In its 2001 annual report, Star lists total assets at approximately $3.7 billion, including its ships, which are valued at $2.6 billion on the company’s books, compared to total debt of $2.2 billion.

Thus, Star values its ships only at approximately $119,000 per berth while the total company valuation, including port terminals, is $166,891 on a per-berth basis ( excluding debt).

Meanwhile, based on a share value of approximately $0.43 at press time, the market valued Star at $81,000 per berth (excluding debt).

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