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May 30, 2002

Voyager Cruises applies for Title XI
The Voyager Cruises, Inc. project to build and operate U.S.-flag cruise ships, has taken a significant step forward. The company has filed an application for Title XI guarantees for construction of up to three cruise ships at Baltimore Marine Industries, Baltimore, Md. According to the most recent U.S. Maritime Administration statement of pending applications, Voyager Holdings is seeking guarantees on a loan of $1.636 billion, with the actual cost to owner of the ships being stated as $1.87 billion.

The Voyager Cruises project has been strongly supported by the Masters, Mates & Pilots (MM&P) maritime union, which would supply masters, deck officers and certain supervisory personnel. Originally, the project was dependent on legislation, (S.127/HR 2901) that would allow for the temporary operation of foreign built U.S.-flag cruise ships between U.S. ports while the vessel owner builds at least two replacement cruise vessels in an American shipyard.

Now, though, the demise of AMCV, looks to have cleared the way for Voyager to set its sites on the Hawiian market.

Albert C. Wallack, president of Voyager Holdings, a wholly-owned subsidiary of the D’Arcinoff Group, today announced the company’s plans to initiate United States-flag cruise vessel operations in both Hawaii and Alaska.

Wallack is a cruise industry veteran. He was a founder and senior VP of Celebrity Cruises; the Chairman of the Cruise Line International Association (CLIA) and, most recently, president of Royal Olympic Cruises, U.S.A. The D’Arcinoff Group is an American owned maritime investment and holding company created to acquire and construct cruise vessels for United States domestic markets.

Key to Voyager’s plans, according to Wallack, is the construction of cruise vessels built in the United States for operation in the Hawaiian Islands.

Wallack says "The private equity financing needed to qualify for Title XI has been arranged and we are awaiting Maritime Administration approval of our application to enable us to commence cruise vessel construction in the United States. We have contracted with Baltimore Marine Industries, the former Bethlehem Steel Sparrows Point shipyard, to build our cruise vessels." Morgan Stanley has been retained as D'Arcinoff Group's financial advisor.

Wallack concedes that after the AMCV debacle that has left two cruise ships unfinished at Northrop Grumman's Ingalls facility, the U,S. Maritime Administration may have "raised the bar" in assessing cruise ship construction applications. Meantime, Voyager is also seeking legislative waiver authority to enable it to finalize its acquisition of existing cruise vessels totaling 3,400 berths that would be operated under the United States-flag with American crews in Hawaii.

The operation of these vessels would, according to Wallack, "enable our company to recruit and train U.S. personnel, to establish itineraries, to develop a market identity, to generate capital, and create jobs for American workers in all positions aboard our vessels. Such legislative authority allowing us to bridge the period between the commencement of construction and the delivery of our new vessels is the only proven, realistic way for a new venture cruise company to enter the cruise industry."

Though the waiver Voyager will be seeking seems likely to follow the AMCV model, the package it offers tourists will be rather different.

"Unlike previous Hawaii programs," says Wallack, "Voyager will operate 3 and 4-day cruises that will be fully integrated with land stays at hotels and resorts. As an integrated cruise and stay program Voyager Hawaii will generate 400,000 incremental hotel nights. We will create the most comprehensive and attractive Hawaiian vacation cruise package that has ever been offered and give a significant boost to Hawaiian tourism."

Voyager has also announced a partnership with the Alaska Native Corporation, Goldbelt, Inc., and its wholly-owned subsidiary, Glacier Bay Cruiseline, to expand Alaska cruise operations.

Again, the company appears to be pursuing an opportunity opened up by the AMCV bankruptcy. Voyager says it "plans to acquire two coastal cruise vessels presently controlled by the Maritime Administration and incorporate these vessels into the Glacier Bay Cruiseline fleet, providing additional capacity for this Native owned Alaska company."

The only two coastal cruise vessels on MarAd's books are, of course, the two built by Atlantic Marine for AMCV.

While Voyager may be seeking to make the most of the situation created by the AMCV bankruptcy, that evidently doesn't extend to picking up the pieces left over at Ingalls. It is understood that it has its own cruise ship design that it is very happy with and that its plans are for a vessel with gas turbine power and waterjet propulsion.

Wallack will not identify the existing ships it plans to acquire (how many R-Ships add up to 3,400?) but is adamant that "they will not be old ships!"

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