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Finance for Cruises to Nowhere

Thursday, October 19, 2017
Borrower   International Ship-owner
Loan   A three year $5,100,000 loan at 15% rising to 18%.
Collateral   Cruise Ship "Enchanted Capri" fitted out as casino, with assignment of charter receipts
Guarantors   Other companies in international group, and owner personally.
Purpose   The owner wanted the loan to finance the purchase and refurbishment of an additional ship.
Exit strategy   We expected the owner to refinance the loan, failing which we would be paid off out of the charter hire over the next three years.
Outcome   The charterer's business failed due to problems with other cruises, and it disclaimed the charter in its bankruptcy. The ship was arrested in New Orleans for non-payment of crew wages and supplies. We bought the vessel at the Marshal's sale. We then found that the ownership of the vessel was claimed by the government of the Ukraine, and litigation, which we eventually won, lasted for about four years. Our attempts to recover from the assets of the borrower were complicated by his "death" evidenced by a forged death certificate (and an empty coffin, on exhumation). He later "jumped" from a window while under arrest in the Ukraine, and did not survive his surprisingly extensive injuries.
Meanwhile, after a false start where we chartered the ship to what turned out to be a bankrupt, we obtained a satisfactory charter, and our ship is earning its keep in the Gulf of Mexico playing host to oil rig construction workers.
Further Information   The Enchanted Capri is fully SOLAS 2010 compliant, and is available for sale or charter with delivery in early 2006.




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