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November 29, 2007 |
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STAR CRUISES: Moody's Continues B1 Rating Review Moody's Investors Service says it will continue to review the B1 corporate family rating of Star Cruises Limited with direction uncertain. The review was initiated on August 20, 2007, after Apollo Management LP's announcement to invest US$1 billion cash in NCL Corporation Limited for a 50% equity interest, with Star Cruises Limited continuing to own the remaining 50% stake. Apollo will name a majority of the NCL board while certain consent rights will be retained by SCL. The cash proceeds will be used to repay NCL's existing debts and fund upcoming new builds. "SCL's current financial profile is largely dragged down by its consolidation with NCL. An improvement in the latter's financial and liquidity positions could lower SCL's financial burden and therefore the need to provide ongoing support to NCL," says Kaven Tsang, Moody's lead analyst for SCL, adding, "A potential dissociation with NCL, as a result of the reduction in ownership level, could also enhance SCL's adjusted key credit metrics." "The current rating of SCL incorporates a 2-notch uplift based on expectations of ongoing support via Resorts World Bhd from Genting Berhad, and its ultimate shareholder, the Lim family. The lowering of Genting's ownership in SCL/NCL may alter the overall group relationship and the support level," adds Tsang. The final rating of SCL will be a result of a combination of the net effect of improvement in its stand-alone financial position and the potential change in support from Genting and the Lim family. Any negative assessment of the latter will pressure the rating. On the other hand, there will be upside potential if Moody's considers the support remains unchanged. In this context, Moody's review will focus on: 1) future development and funding plans of SCL and the associated impact on its stand-alone credit profile; 2) the likelihood of SCL extending support to NCL and the impact on its adjusted financial profile; and 3) future ongoing support from Genting and the Lim family, and the potential rating uplift. Star Cruises Limited, publicly listed in Hong Kong, is 19.3% owned by Resorts World Berhad, which is, in turn, 49.2% owned by Genting Berhad. SCL operates 21 ships with some 33,300 lower berths under five brands: Star Cruises and Cruise Ferries, which service Asia Pacific, and three brands under NCL. |
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