2007

Some Beautiful Returns!

Last week’s news on the strategic investment made by Apollo Management into the Frank Del Rio led Oceania Cruises was notable for the$850 million amount the 5- year-old cruise line commanded. What deserves a bit more attention is the return that equates to. Our readers will recall that shortly after 9/11 Oceania’s current cruise-ships were effectively valueless. A consortium of banks, led boldly by Calyon, rather than panic and sell the vessels for a mere $90 million, then the best offer, formed Cruiseinvest to own the ships. A plan to recover value developed with Frank, AMA and themselves was worked out. Frank raised $14 million dollars for what was effectively a start up marketing company, which then chartered in the three vessels. It was a risky bet for sure.

But now a little math, Apollo’s $850 million assumed $375 million in debt, raised a short while ago to pay off the banks. So $850 million minus $375 million imputes an equity value of $475 million. Not too shabby a return on $14 million!

This is only an excerpt of The Week in Review – 03/08/2007

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