Hornblower files bankruptcy, plans to lower debt by $720 million

By Sarah Lizee

Olympia, Wash., Feb. 21 – Hornblower Cruises and Events, Inc. filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the Southern District of Texas.

The company said it has entered into an agreement with its investors, under which funds managed by Strategic Value Partners, LLC and its affiliates will acquire 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, a stand-alone operating unit of Hornblower in Australia.

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 about $720 million.

Hornblower's overnight cruising business American Queen Voyages (AQV) will be sold, or, if a sale can’t be achieved, its operations will be wound down. The company said it is taking this action because of the underperformance of AQV, which has not rebounded from the pandemic.

Outside of AQV, Hornblower said its current services will not be impacted in any way by the transaction.

Hornblower said it expects to move through the process on an accelerated basis and emerge from Chapter 11 in about four months.

Hornblower has received a commitment for $300 million in debtor-in-possession financing from Deutsche Bank Private Credit & Infrastructure to refinance its existing super-priority term loan, in addition to the $121 million in new-money financing from SVP-managed funds and Crestview.

Separately, the company is starting ancillary proceedings in Canada under the Companies' Creditors Arrangement Act seeking recognition of the U.S. proceedings.

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

In its petition, the company listed $500 million to $1 billion in assets and $500 million to $1 billion in liabilities.

The largest unsecured creditor is Seatran Marine, LLC, based New Iberia, La., with a $4 million trade payable claim. No other unsecured creditors were listed with claims of $1 million or more.

Guggenheim Securities, LLC is serving as investment banker to Hornblower, Alvarez & Marsal North America, LLC is serving as financial adviser, Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel and Porter Hedges LLP is serving as co-counsel.

Perella Weinberg Partners LP is serving as investment banker to SVP and other Hornblower lenders, FTI Consulting, Inc. is serving as financial adviser and Milbank LLP is serving as legal advisor.

PJT Partners is serving as financial adviser to Crestview, Davis Polk & Wardwell LLP is serving as legal counsel and Vinson & Elkins LLP is serving as co-counsel.

Hornblower is a San Francisco-based cruise and event company. The Chapter 11 case number is 24-90087.

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