AMERICANQUEENThe American Queen and Empress of the North have been put up for sale by the U.S. Maritime Administration, or Marad, bringing all the old questions to bear about the future and viability of U.S. river cruising and more specifically of the two ships in question.

Marad hired investment banking firm AMA Capital Partners to assist with the sale of the former Majestic America Line ships.

When the American Queen and the Empress were turned over to Marad last year (in August and November, respectively), they carried approximately $28.3 million and $37.3 million in debt, respectively, according to Majestic's parent, Ambassadors International. The ships were turned over because of a default on a Marad guaranteed loan made under Title XI of the Merchant Marine Act.

One source valued the American Queen at between $25 million and $30 million, and the Empress at slightly less than that.

AMA Capital Partners, an investment banking and private equity firm, said it envisioned three categories of potential buyers: a cruise company; a travel company, including a hotel operator; and a casino investor.

"We might be able to develop credit product for a qualified buyer," said Peter Shaerf, managing director of AMA.

Of the two ships, industry insiders signaled that the American Queen is a stronger property and more viable investment.

"It has much more earning potential," said Bruce Nierenberg, who served as president of the Delta Queen Steamboat Co. when it was owned by Delaware North Cos. from 2002 until the sale to Ambassadors in 2006. "That ship is a very valuable commodity."

Nierenberg named Boston-based Grand Circle Travel as an example of a company already in the river cruising business that would be a good candidate to buy the American Queen.

As for running overnight cruises on the Mississippi and Ohio river systems, "it's definitely a viable market," said Nierenberg. The American Queen, he said, is "a really nice ship, it has good capacity, it was designed to run on those rivers. But you have to have a very realistic understanding of what this ship is, what it can do, and how you can operate and market it. It's not a fairy tale."

Rod McLeod, who served from 1999 to 2001 as president and COO of the Delta Queen Steamboat Co.'s parent, American Classic Voyages, has a different vision for the American Queen.

"What I would look into is if the investor group could also acquire the Delta Queen Steamboat Co. name," said McLeod. "That name has a rich history and a rich past ... that would invite one of the smaller ships, the Columbia Queen or Queen of the West, into the equation, that could operate on some of the tributary rivers. A two-ship operation and the rebirth of the Delta Queen Steamboat Co. would be an interesting project."

He added that one hurdle has been the general perception of the Mississippi River as an industrialized river, rather than a vacation destination. "But I think it's unfair," said McLeod. "In my view there is a market for a river cruise through the heartland of America."

Neither McLeod nor Nierenberg saw the feasibility of converting either the American Queen or the Empress of the North into casinos or transporting them to inland waterway systems in other parts of the world.

As for the Empress of the North, both agreed that the ship has less promise.

"That ship is very pretty, but I think its utility value is limited mainly by its draft: It has a 12-foot draft," said McLeod. "The draft is a problem, particularly when it operates in the Columbia River."

Indications were that in this financial climate, neither the American Queen nor the Empress of the North would likely sail anytime before 2011 at the earliest.


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