Details emerge on Star Cruises refinancing

HSBC launches $450 million offering split into a three-year revolving credit facility and seven-year amortizing loan.

HSBC has launched the $450 million refinancing for Malaysia's Star Cruises, the world's third biggest cruise business in which the Genting conglomerate is the major shareholder. Banks are being invited to join the syndication group with the closing date for commitments scheduled for the third week of December, according to reports.

The loan has been split into two tranches: a $150 million three-year revolving credit facility with an average life of 2.25 years and a $300 million seven-year amortizing loan that has a 5.25 year average life.

The three-year piece will pay a margin of 162.5bp over Libor, which is repayable in four equal semi-annual installments after 18 months. The loan is secured by a charge over shares in NCL Holding - in which the borrower bought a 50.2% interest last year - and by second priority mortgages on seven vessels.

The seven-year piece is repayable in eight semi-annual installments after 42 months. For the first two years of the deal, the coupon will be 125bp, which goes up to 162.5bp in years three and four, 175bp in the fifth and sixth years and 187.5bp for the last twelve months.

Security comes in the form of first priority mortgages on seven vessels.

Banks wishing to join the syndicate are being offered to do so at two levels. Lead arrangers are being asked to underwrite $70 million, with a hold of $50 million, with fees rumoured to be around 90bp.

At the second level, which will not be underwritten, banks can hold between $40 million and $50 million, with fees reported to be 70bp.

The $450 million issue refinances the outstanding amount of a $600 million five-year loan that was arranged for Star Cruises' acquisition of the NCL Holding shares. HSBC arranged that deal with Barclays Capital last year for an all-in cost of 168.75bp.

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