Thursday, May 18, 2000 Royal Caribbean moves to expand its European business The European market is looking increasingly attractive to the giants of the cruise industry. Last week , P&O announced that it was acquiring Festival.Now comes news that Royal Caribbean Cruises Ltd. is investing in a strategic alliance and start-up joint-venture cruise line with First Choice Holidays. First Choice is one of the U.K.'s largest tour operators. It serves over 4 million customers annually in the U.K. and Canada. Its brands include First Choice, Unijet, Hayes & Jarvis, Suncars, Sovereign and Sunsail. It has a charter airline with 25 aircraft operated under the name Air 2000, a seat broker, Viking International, as well as the world's largest yacht holiday rental company. Royal Caribbean is buying a new issue of First Choice convertible preferred stock for approximately $300 million The includes a conversion option that, if fully utilized, would give Royal Caribbean about a 20% interest in First Choice. The issuance of the convertible preferred stock will allow First Choice to accelerate its growth opportunities in the rapidly consolidating European tour operator business. Under the terms of the agreement, Royal Caribbean will be entitled to representation on the board of directors of First Choice. Completion of the transaction is subject to First Choice shareholder and regulatory approval. Royal Caribbean expects to see a quick impact to its European passenger sourcing. First Choice will provide both Royal Caribbean and its Celebrity Cruises brand with a significantly larger distribution base in the U.K. Independently, Royal Caribbean and First Choice will launch a new cruise brand targeting the mass-market European vacationer through a joint venture. Viking Serenade, a 1,500-passenger ship currently operated under the Royal Caribbean International brand, will be the first ship operated by the new cruise line, which has yet to be named. As part of the transaction, Viking Serenade will be renamed and offer itineraries out of the Mediterranean in summer and out of the Caribbean in winter. Operations will begin in the spring of 2001. Viking Serenade will be transferred to the new company on completion of the strategic alliance at an agreed valuation of approximately $100 million. Royal Caribbean and First Choice will each subscribe approximately $50 million for 50% of the joint venture. News Index  Marine Log Home page

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