The sale of the Delta Queen Steamboat Co.
to Ambassadors International will consolidate the two largest North
American river cruise companies to create a five-ship steamboating
operation with itineraries from Alaskas Inside Passage to the
Mississippi River.
The Delta Queen
acquisition comes only three months after Ambassadors established
the Ambassadors Cruise Group division and purchased American West
Steamboat Co., a two-ship operation based in Seattle.
With the twin
purchases, Ambassadors -- an events, incentives, meetings and
conferences company -- stakes a claim in the mainstream leisure
travel industry.
Delaware North
Cos., which purchased Delta Queen out of bankruptcy in 2002, sold
the Delta Queen brand, current and past passenger lists,
miscellaneous operational property and three ships: the
436-passenger American Queen, the 412-passenger Mississippi Queen
and the 174- passenger Delta Queen, originally launched in 1927 and
listed on the National Register of Historic Places.
Brian Schaefgen,
Ambassadors CFO, said the sale increases the cruise groups number
of berths from 365 to 1,400. We become a leader in our category, he
said.
Ambassadors agreed
to pay $3 million in cash and assume $9 million in customer
deposits and $35 million in long-term debt. Ambassadors will also
turn over 100,000 shares of its stock to Delaware North if certain
revenue goals are achieved. The parties expect to close the sale by
the end of April.
In a statement,
Delaware North said the sale was driven by the need to focus on
growth opportunities in our core business and because of other
investment considerations.
Schaefgen said the
purchase is expected to contribute $38 million in revenue and
generate $3 million in positive cash flow in 2006.
Ambassadors said it
remains poised for additional acquisitions.
Delta Queen
itineraries on track
The Delta Queen
line will continue offering river cruises throughout the heartland
of America and the old South, said David Giersdorf, Ambassadors
COO.
Delta Queen, which
is headquartered in New Orleans and features the city heavily on
its Lower Mississippi routes, had temporarily ceased operations
after Hurricane Katrina.
Ambassadors said
that all published departures of the Mississippi Queen and the
Delta Queen will operate as planned in 2006 during an abbreviated
season.
Ambassadors hopes
to bring the American Queen back into service in 2007 and establish
longer operating seasons, Giersdorf said. That vessel previously
had been offering short cruises from New Orleans under cruise-tour
packages created by Delta Queens president, Bruce
Nierenberg.
Ambassadors now
clearly dominates the river cruise market, Giersdorf said. We are
essentially the entire steamboat cruise market and a significant
player in the river and coastal cruising market.
Ambassadors
President and CEO Joe Ueberroth said he believes there is real
potential for revenue growth.
The company hopes
to realize operational and marketing synergies from its
consolidation of American West and Delta Queen, Giersdorf said,
starting with the combination of past passenger lists.
Ambassadors will
try several strategies to expand its margins, Giersdorf said. We
will address some issues in the market, the way we go to market,
what is the right price point. Well look at discounting and groups.
Weve done that with American West and have made some impact
already. We believe there is real potential.
The company hopes
to expand revenues, as well, he said, by returning to a longer
season in 2007.
To contact
reporter David Cogswell, send e-mail to [email protected].