S&P cuts Star Cruises

Standard & Poor's said it lowered the corporate credit rating on Star Cruises Ltd. to B from BB- following the removal of the implicit support from Genting Bhd. (BBB/stable) due to a change in its investment priorities. S&P said the ratings incorporate the financial flexibility benefit that Star Cruises is still expected to derive from its link to Genting and to its major shareholder, the Lim family.

According to the agency, ratings on NCL remain on CreditWatch with negative implications until it gets the $1 billion capitalization from Apollo Management LP in exchange for a 50% stake in NCL. Under the agreement, Star Cruises will cease to consolidate NCL as a fully owned subsidiary and will account for the remaining 50% stake by using the equity method, according to the agency.

Ratings reflect the issuer's weak market position and small size relative to its two main competitors and aggressive financial profile, with a pro forma debt-to-EBITDA ratio estimated at slightly above 6 times for 2007 and gradually deteriorating in the absence of an equity injection in order to renew its fleet.

In addition, following NCL's capitalization, the agency said it would continue factoring NCL's debt into Star Cruises on a proportionate basis.

S&P said these weaknesses are offset by an established market position in Asia, the sale of Star Cruises' 25% stake in the Sentosa Integrated Project, the upcoming Apollo Management's 50% partnership in NCL and its subsequent deconsolidation from Star Cruises, and the $200 million investment in Macau.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.