Vard has announced that it is seeking a partner for its cruise operations, Kloster Cruise, or one of its divisions, Norwegian Cruise Line, Royal Cruise Line and Royal Viking Line.

According to a statement from Vard's board of directors, it is expected that a partner will be found within the next few months.

In a prepared statement, the board said that a partnership would result in a substantial strengthening of Vard and Kloster Cruise's capital base and serve as a solid foundation for the company's further development.

The immediate reaction on the Oslo stock exchange was negative, but the stock recovered and at press time Vard's A shares traded at NOK 80 and the B shares at NOK 78.

Concerns

The announcement fueled concerns here that Kloster executives are not confident that the company's recent restructuring is enough to put the cruise operation on a profitable course. In spite of statements from Vard that 1992 will be the best year ever for Kloster Cruise.

Kloster suffered a loss of $11.7 million for the first nine months of 1991 compared to earnings of $31.9 million for the first nine months of 1990. Next year, payments on Kloster's newbuildings will come due.

Analysts said that a portion of the earnings in recent years has come from cost cutting. While more could be gained from the restructuring, it is a limited source, they said, adding that at some point the company must be turned around.

More severe losses earlier this year were avoided by an extraordinary $11.7 million currency gain. Analysts also noted that at least a good portion of earnings in the fourth quarter is likely to come from ship charters rather than cruise operations.

As Vard executives have said that its cruise operations will generate earnings in the fourth quarter of 1991 and that 1992 will be its best cruise year ever, the announcement that Vard is seeking a partner comes as a surprise to many. Also, companies usually find partners and then make announcements.

Vard is also highlighting the estimated market values of its cruise ships, which analysts say are highly flexible, depending on the ships' earnings abilities and on finding buyers.

The presentation of estimated market values also seems to underscore two things, whether intended by Vard or not: the required investment for a potential partner, and purchase price to a potential buyer.

Vard has long claimed that its shares are undervalued and has repeatedly referred to the market value of its fleet. It has so far seemingly had little effect on the Norwegian stock market.

A planned public introduction in the United States was shelved after the 1987 October stock market crash. Analysts say that a public introduction here now, in lieu of finding a partner, would be difficult based on the company's 1991 performance.

From Norway, it is also reported that Trygve Hegnar, CEO, will be leaving his position sooner than anticipated. Previous reports said he would vacate his position by the end of 1992, while reports from Norway now say he plans to leave following the company's next annual meeting.

At press time, company executives in Norway were travelling and unavailable for comment.

Fleet Value

Vard is listing the estimated values of its cruise ship fleet as follows: for NCL, the Norway, $300 million; Seaward, $225 million; Sunward, $80 million; Westward, $80 million; Skyward, $43 million; Southward, $43 million; Starward, $43 million; Dreamward, $240 million; and Windward, $240 million. Total value for the NCL fleet is estimated at $1,294 million. Total debt is listed at $790 million.

For the RCL fleet values are estimated at $225 million for the Crown Odyssey; Royal Odyssey, $80 million; and Golden Odyssey, $40 million. Total value for the RCL fleet is estimated at $345 million. Total debt is listed at $176 million.

For the RVL fleet values are estimated at $250 million for the Royal Viking Sun and $90 million for the Royal Viking Queen. Total value for the RVL fleet is estimated at $340 million. Total debt is listed at $164 million.

Other assets and ferry vessels were estimated as having a market value of $367 million and $423 million in debt.

Total market value of the Kloster fleet is estimated at $2.346 million. Total debt is listed at $1,553 million.