Star Cruises could face debt repayment demand
Updated at 6.53pm: Star Cruises revealed it might face an immediate demand from Barclays Bank Hong Kong to repay US$450 million after a deterioration in the cruise company's operating profit.
In an announcement issued by Star Cruises, it said it had breached one of the financial covenants of its 5-year US$450 million Barclays syndicated term loan as of 30 September.
The company's average consolidated net borrowings to EBITDA (earnings before interest, tax, depreciation and amortalisation which shows a company's operational efficiency) ratio for the reporting period ended at September 30 was approximately 5.27:1, which has exceeded the ratio of 5.00:1 under the loan Agreement.
It attributed its greater than expected decline in the group's revenues, which being affected by global economic slow down and dramatic fall in travelers after the terrorist attacks on the US on September 11, was the major contributing factor in the recent breach of the loan term.
