Royal Olympia put under debt pressure for two star cruisers

Royal Olympia Cruises (ROC) has said it is in negotiations with German state bank KFW over a $250 million loan it received for the purchase of its two star vessels Olympia Voyager and Olympia Explorer from German shipyards Blohm+Voss. According to sources, KFW has not accepted an ROC debt restructuring plan, considering its business plan not viable due to management flaws, and is pressing for repayment. The cruise line, for its part, counterargues that its vessels, which have been booked by Athens 2004, the organizers of the Olympic Games, as hotels for the visitors, have achieved almost 100 percent capacity utilization in both its European and US operations, but that the September 11 events and the ensuing generally unfavorable circumstances in the global economy have prevented the company from following the policy it would have wished. The German bankers, however, seem unconvinced, maintaining that ROC’s financial woes are due to its operating structure, its excessive number of employees, the high cost of the Greek shipping register and its failure to tap the two ships’ main advantage – speed (they are said to be the fastest cruise ships in the world today). According to the sources, KFW has drawn up an alternative operating plan for the two cruisers, and has invited Andreas Potamianos, one of ROC’s owners who was responsible for the choice of vessel, to discuss a different corporate scheme, free of the company’s liabilities. All this has to be finalized within 60 days, as ROC, which is listed on the New York Stock Exchange, has filed for bankruptcy under Chapter 11 and, as such, is afforded this period to reschedule its debts. The company said in a statement that it «has exercised its legal rights in the US and is negotiating a viable solution.» Following KFW action, the two ships have been immobilized in the US while negotiations are under way. Potamianos yesterday discussed the problem with Merchant Marine Minister Giorgos Paschalidis, who, responding to questions later, said the issue was a bank dispute but that efforts will be made to find a viable solution to secure ROC’s approximately 1,500 jobs. KFW sources said yesterday that the loan could be repaid if appropriate marketing and management policies are applied.