Thursday, April 16, 2009

Trouble for Windstar?

The parent company for Windstar Cruises, Ambassadors International, recently said it wanted to sell its non-Windstar assets and focus the business solely on Windstar. One of those businesses for sale is the dormant Majestic America Line. The company decided to dock those ships and is trying without success to either sell the line or the ships.

But the most ominous developments occurred yesterday. In a 10-K filing with the SEC, the line warned, "If we are not successful at a combination of selling our non-Windstar Cruises assets, raising additional financing and/or renegotiating existing debt obligations in order to raise funds for operations, we may not be able to continue as a going concern." In short, the filing didn't paint a very rosy picture for the company. (The complete filing is on the AMIE website.)

The company also is reported to have missed a $1.8 million interest payment on its debt, which was due yesterday. If it is not paid within a month, it could trigger a demand for the $97 million in principal and the interest. AMIE said they intend to pay the interest before that happens, however. In addition, the stock which closed at $0.39 yesterday faces delisting on the NASDAQ in mid-July if its price doesn't go above $1. (It hasn't been above $1 since December.)

While companies often turn around, and Windstar could well remain in business, we are suggesting that all readers with bookings on Windstar make sure that they have insurance that covers them for a possible bankruptcy or suspension of operation by the cruise line, or at least have paid with a credit card where they can recover their money. (Don't just assume you are covered; check with your insurance company or credit card company. They often have a watch list that says if you purchased your policy or made a payment after the company went on the list, you are not covered.)