Carnival unit
sues to seek
control of Patriot

The foreclosure attempt comes
on the heels of American Classic's
Chapter 11 filing last week

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By Rick Daysog
rdaysog@starbulletin.com

One of American Classic Voyages' largest creditors has moved to seize the ms Patriot cruise ship, less than a week after the vessel's operator filed for bankruptcy reorganization.

In a foreclosure suit filed in U.S. District Court in Honolulu on Monday, HAL Antillen N.V., a unit of Carnival Corp., has asked the U.S. Marshals here to take custody of the 1,212-passenger ship, which is docked at Aloha Tower.

HAL Antillen alleged that Oceanic Ship Co., the American Classic unit that owns the ms Patriot, is in default on an $84.5 million loan. No hearing date has been set.

According to the suit, Oceanic owes $79.4 million on the loan, which is secured by a maritime lien.

The suit comes after American Classic Voyages filed for Chapter 11 reorganization on Friday in Delaware, listing debts of $452.8 million and assets of $37.4 million. The bankruptcy filing prompted American Classic to shut down its cruise ship operations in Hawaii and lay off 1,150 employees.

Oceanic Ship Co., which is the legal owner of the ms Patriot, was not placed under bankruptcy protection, according to an attorney for HAL Antillen.

The attorney declined further comment. A spokeswoman for Carnival Cruises' Holland America subsidiary could not be reached for response this morning.

Philip Calian, American Classic's chief executive officer, had no comment.

American Classic and Carnival Corp. have been in negotiations over the status of the ms Patriot since American Classic filed for reorganization on Friday.

American Classic acquired the ms Patriot, formerly known as the Nieuw Amsterdam from Carnival's Holland America Line in October 2000 for about $114.5 million. The two companies recently renegotiated the terms of the mortgage on the cruise ship, in a deal that allowed the buyer to defer principal payments.

American Classic, which is controlled by billionaire Sam Zell, filed for bankruptcy protection after its business fell by 50 percent in wake of the Sept. 11 terrorist attacks.

In addition to mothballing its two Hawaii ships -- the ms Patriot and the 860-passenger SS Independence -- the Chicago-based company also stopped its mainland coastal voyages and its inland river trips except for one ship, the Delta Queen Steamboat.