Star Cruises to launch Hong Kong IPO

Having got its finances shipshape, Star Cruises is on course to raise $600 million-$800 million via a Hong Kong listing in the next 2 months.

Star Cruises has signed a $600 million, five-year loan facility with a syndicate of 16 banks and will pay interest on this of 100-150 basis points over six-month Libor depending on the company's interest cover, says Gerard Lim Ewe Keng, vice-president for corporate planning at Star Cruises. The facility, arranged by HSBC and Barclays Capital, refinances a $600 million bridging loan taken out to finance the $1.9 billion acquisition of Norwegian Cruise Lines(NCL) earlier this year.

The new medium-term loan paves the way for Star Cruises to proceed with an initial public offering (IPO) on the Stock Exchange of Hong Kong. Financial sources suggest the IPO, which is being handled by HSBC and Credit Suisse First Boston, is likely to be launched next month. "I am seeking shareholders' approval to issue up to 300 million new shares and to list in Hong Kong," says Lim. These approvals are expected to be given at an extraordinary general meeting in Hong Kong on Wednesday 23 August.

Currently, Star Cruises has 624 million shares, some 15% of which are in public hands. The company has a primary listing in Luxembourg and a secondary listing in Singapore. Hong Kong will replace Luxembourg as host to Star Cruises' primary listing, says Lim.

Single cruising

From the company's perspective, the sooner the fund-raising the better. Originally, it had planned to buy NCL via a 60/40 joint-venture with Carnival Corp, but the latter pulled out of the deal in March leaving Star Cruises to go it alone. The necessary additional financing was provided by the $600 million bridging loan arranged by ABN Amro and $374 million of loans from Malaysian parent company Resorts World and its controlling shareholder, the Lim family.

The shareholders' loan will be repaid using the $600 million-$800 million the company plans to raise via its Hong Kong listing. The remainder of the IPO proceeds will go towards financing three new ships - together costing more than $1 billion - that Star Cruises will be taking delivery of over the next two years. Star Cruises has signed letters of intent giving it options on a further two ships at a cost of more than $350 million apiece.