Hornblower restructures, pulls plug on American Queen

Hornblower Group CEO Kevin Rabbitt: “With the support of our financial stakeholders, we will continue to advance our business initiatives and drive growth."

As part of a restructuring that will see it get an infusion of cash and a new majority owner, Hornblower Group has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. The restructuring agreement will see funds managed by global alternative investment firm Strategic Value Partners, LLC (SVP) and its affiliates take majority ownership of Hornblower and provide a significant equity investment in the business. Crestview Partners will retain a significant minority position in Hornblower and become the sole owner of Journey Beyond, an Australian stand-alone Hornblower operating unit.

The agreement also provides for Hornblower to receive $121 million in new-money financing from SVP-managed funds and Crestview, and the company’s total debt will be reduced by approximately $720 million.

In connection with the agreement, Hornblower’s overnight cruising business American Queen Voyages will be sold or, if a sale cannot be achieved, its operations will be wound down. Hornblower says it is taking this action “because of the underperformance of AQV, which has not rebounded from the pandemic.”

American Queen Voyages has already ceased operations, with Travelmarket Report noting that
this “follows on the heels of several large travel agency organizations suspending all sales of the company’s cruises after repeated problems with commission payments and customer service issues.”

Hornblower says that it has ensured that appropriate information and resources are available for AQV customers.

Hornblower says that, outside of AQV, current services will not be impacted in any way by the transaction:

All services are operating as usual and running on their normal schedules, says the company.
Booked trips, excursions, private events and charters, dining and sightseeing cruises, tours and activities and other experiences are continuing as planned.

Hornblower notes that it is continuing to serve its B2B partners and customers as usual with the Anchor all-in-one ticketing & operating system is supporting partners and customers as normal. Anchor Operating System, LLC is a subsidiary of Hornblower Group and an independent entity.

Journey Beyond is operating normally and is not included in the court-supervised process.

CORE BUSINESSES PERFORMING WELL

“Building on our commitment to deliver amazing experiences for our guests, Hornblower has grown to become a global leader in world-class experiences and transportation,” said Hornblower Group CEO Kevin Rabbitt. “We have strong relationships with our government agency and business partners, and our core businesses are performing well with robust and growing demand.”

“The steps we are taking today will enable us to address AQV and strengthen our financial foundation as we continue serving our guests and commuters around the world,” Rabbitt added. “With the support of our financial stakeholders, we will continue to advance our business initiatives and drive growth. We thank the entire Hornblower team for their hard work and dedication, as well as our vendors and partners across our businesses for their continued support.”

“Hornblower is an outstanding company and a market leader in water-based transportation, tours and experiences, with complementary businesses and long-term contracts in attractive markets,” said David Geenberg, co-head of the North American investment team at SVP. “With substantial growth potential in travel and tourism, we see significant opportunities ahead for Hornblower to further expand its leadership position. We look forward to working closely with the leadership team to help support the company’s strong operating staff, excellent service and exceptional guest experiences as we usher in Hornblower’s next era of success.”

“This transaction is an important step in ensuring Hornblower’s future success, and we are enthusiastic about partnering with SVP on the company’s next growth chapter post-COVID,” said Crestview president Brian Cassidy. “We are also excited about being the sole owner of Journey Beyond, which has incredible growth opportunities ahead.”

CHAPTER 11 PROCEEDINGS

Hornblower says that it expects to move through the restructuring process on an accelerated basis and emerge from Chapter 11 in approximately four months.

In connection with the process, Hornblower has received a commitment for $300 million in debtor-in-possession financing from Deutsche Bank Private Credit & Infrastructure to refinance the company’s existing superpriority term loan, in addition to the $121 million in new-money financing from SVP-managed funds and Crestview. Following court approval, this new financing, combined with cash generated from ongoing operations, is expected to support the business during the court-supervised process.

Court filings and other information related to the proceedings are available on a separate website administrated by the company’s claims agent, Omni Agent Solutions. You can access it HERE.