Moody’s might lift Oceana, Seven Seas

Moody's Investors Service said it placed the B2 corporate family ratings and B2-PD probability of default ratings of Oceania Cruises Inc. and Seven Seas Cruises S DE RL on review for possible upgrade.

The review follows the Sept. 3 announcement that Oceania's and Seven Seas' parent company, Prestige Cruises International, Inc., will be acquired by Norwegian Cruise Line Holdings, Ltd. (Ba3 corporate family rating at NCL Corp. Ltd.) for $3,025,000,000.

As part of NCL, Oceania and Seven Seas will benefit from greater operating leverage, increased diversification and lower leverage. Additionally, the agency expects the 5% roughly $960 million subordinated PIK sub debt held at the ultimate parent level will convert to common equity at the time of the acquisition thereby eliminating this obligation.

Moody's also placed Oceania's and Seven Seas' individual debt instruments on review with a direction uncertain pending information on the final capital structure of the combined entity and the relative amount of senior versus junior ranking obligations. The review for upgrade will focus on the ultimate disposition of the debt instruments in each company's capital structure.

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