Moody's rates Insignia Vessel loans B1, Caa1

Moody's Investors Service said it assigned B1 (LGD3, 93%) ratings to Insignia Vessel Acquisition, LLC's $40 million five-year senior secured first-lien revolving credit facility and $300 million six-year senior secured first-lien term loan and a Caa1 (LGD6, 90%) rating to its $75 million seven-year senior secured second-lien term loan. The loans will be guaranteed by parent company Oceania Cruise Holdings, Inc.

The agency also moved Oceania Cruise's B2 corporate family and probability-of-default ratings and LGD4 (50%) loss-given-default assessment to Insignia Vessel.

The outlook is stable.

Proceeds from the new bank facilities will be used to refinance Oceania Cruise's existing bank facilities as a result of a change of control triggered by the company's strategic partnership with Apollo Management LP. Apollo will purchase a roughly 60% ownership interest in Oceania Cruise for $325 million via a perpetual PIK preferred security. About $275 million of the proceeds of the PIK preferred will be distributed to existing shareholders and the remainder is expected to be used to secure new ship orders.

The agency said the B2 corporate family reflects the company's high pro forma leverage, reliance on a small fleet of ships, limited operating history and Moody's expectation that the company will seek to grow its fleet, which could cause leverage to spike when new ships are delivered several years in the future.

Moody's said these considerations are not sufficiently offset by the company's profitability, which maps to an A rating.

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