American Cruise Line was granted an eleventh hour reprieve to continue its sales operations last week when the insurance company that underwrites its $2.6 million Federal Maritime Commission surety bond extended it through January 25.
The publicly traded cruise line, which filed for reorganization under Chapter 11 in U.S. Bankruptcy Court in Hartford, Conn. on Nov. 22, won the right to continue to book cruises for a new season next March 6 just one day before its old bond was to expire on Dec. 1.
A spokesman for the FMC confirmed that the Aetna Casuality and Surety Co. of Hartford, Conn., agreed to extend the ACL bond after both parties met in bankruptcy court in Hartford on Nov. 30.
Although American Cruises incurred a $5.5 million net loss for fiscal 1988 and has long-range plans to lay-up its entire three-vessel fleet each winter, President Roger Coomer said that ACL founder and chairman Charles Robertson was ready to lead an investor group in taking control of the restructured company.
Coomer acknowledged that ACL will have to continue to seek other ways to guarantee unsecured deposits because Aetna had no intention of extending the bond beyond the extended expiration date. He said that ACL had continued to accept bookings on all three of its ships for sailings after March 6 and that there was no interruption in ACL's sales operations after the Chapter 11 filing.
Coomer also said that American Cruises had slashed its prices by an average of 20 percent in 1989 and that the 132-passenger Savannah, the 132-passenger Charleston and the 140-passenger New Orleans were slated to operate seven-, 14- and some 10-day cruises next year. He confirmed that the 85-passenger America was still for sale at a listed market value of $830,000, that ACL had an outstanding debt of $18.9 million, and said "several hundred" passengers had booked for sailings after the new season begins on March 6.
A spokesman for the Federal Maritime Commission confinned that Aetna had extended the bond and noted that ACL would have been forced to cease its advertising and sales functions if Aetna's initial intention to terminate the bond hadn't been rescinded. He also confirmed that there were no outstanding passenger claims against ACL for non performance of cruise services because ACL hadn't accepted bookings after its season ended in mid-November.
The FMC spokesman also explained that the FMC bond covers 100 percent of deposits and payments for "only the water portion" of any cruises departing from U.S. ports that have yet to be performed. He explained that the bond failed to cover pre-payment for such non-cruise operations as shore excursions and airlift and that ACL could resort to lending institutions, protection and indemnity clubs or escrow accounts to meet FMC requirements.