American Classic is shelving plans to move into a $36 million, 240,000-sf call center under construction in Sunrise, FL, 20 miles north of Downtown. American Classic calls itself the largest U.S.-flag cruise company.
Zell couldn't be reached for comment at GlobeSt.com's publication deadline. But Miami brokers who do deals regularly with the Illinois opportunist, tell GlobeSt.com on condition of anonymity the cruise line bankruptcy petition, filed Oct. 19 in Miami, is one of Zell's few setbacks in a 30-year that has made him the largest apartment owner in the United States. Zell is chairman of Chicago-based Equity Residential Properties Inc.
Financially stung by the loss of passengers following the Sept. 11 terrorist attacks in New York and Washington, DC, American Classic listed cash on hand of $18 million and debt of at least $80 million on a mortgage held by Holland America, a subsidiary of Carnival Corp.
American Classic is shutting down six of its seven ships but will continue to operate its core Mississippi river cruises with its flagship firm, Delta Queen Steamboat Co. out of New Orleans. A total 2,150 jobs were lost by the Chapter 11 filing.
In a prepared statement, Phil Calian, American Classic's CEO, says the company was breaking even before the Sept. 11 tragedy but was losing about $6 million in cash weekly following the attacks. Gross bookings fell 50%. Cancellations rose 30%.
Vendors, which had given the company 60-day payment terms, demanded immediate payment. Other vendors, which had given American Classic 30 days to pay for supplies and products, asked for immediate cash.
Calian says the only alternative the company had to preserve its cash position and improve its balance sheet was to file for protection from creditors under the U.S. Bankruptcy Code.
"Our banks didn't enable us to borrow against our credit line, and we were in a cash squeeze position that made it clear to us we were going to hit a wall," the CEO says in his statement.
The company continues to build two new 1,900-passenger Project America ships at a total hard cost of $880 million in a joint venture with Northrop Grumman Corp. and the U.S. Maritime Administration. The ships are scheduled for delivery in 2004 and 2005 and will sail out of Hawaii.
The Maritime Administration gave American Classic a loan guarantee of $1.1 billion that includes the construction cost and interior finishings on both vessels.
"Without a doubt, our business will undergo significant changes as a result of this reorganization, but we are optimistic that this process will allow us to emerge a healthier company positioned for the future," Calian says.
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