Ambassadors accepts tenders for 68% of 3.75% convertibles in exchange

By Jennifer Chiou

New York, Nov. 13 - Ambassadors International, Inc. said it accepted tenders for $65.8 million, or about 68%, of its $97 million of 3.75% convertible senior notes due 2027 in the exchange offer that ended at 5 p.m. ET on Nov. 12.

The deadline had been delayed from 5 p.m. ET on Nov. 5 and, previously, from midnight ET on Oct. 23.

As announced on Sept. 25, when the exchange was launched, for each $1,000 principal amount of the existing notes, it was offering 230.3766 shares of common stock and $273.1959 principal amount of 10% senior secured notes due 2012.

In all, the company will issue about 15.2 million of its shares as well as roughly $18 million of the 10% notes. Stockholders authorized the issue of the shares at a Thursday meeting.

The new notes will pay interest in kind or in cash, at Ambassadors' option.

Ambassadors was also soliciting consents to remove certain covenants and make other amendments to the convertibles indenture. The changes required the consent of holders of a majority of the notes, and the company added that it had reached that threshold.

Ambassadors expects to execute a supplemental indenture shortly.

At Nov. 4, the company had received tenders for $66 million, or 68%, of the convertibles, unchanged from the announcement on Oct. 23.

As part of that earlier announcement, Ambassadors had said that the three holders of the convertibles that entered into a commitment and support agreement had nominated directors. They included Eugene I. Davis, Stephen P. McCall and John Bianco.

Since the exchange was completed and at least 58% of the convertibles were tendered, Ambassadors agreed to hold a special meeting of its board of directors within two business days of the completion of the exchange at which the three nominees will be elected.

If all $97 million of notes had been tendered, the company would have issued 22.3 million new shares, or 66.67% of its stock, and $26.5 million of new notes. Outstanding debt would have been cut by $70.5 million.

With the accepted tenders, the company said it will mark a $47.8 million net reduction in its outstanding long-term debt.

The company said it was carrying out the exchange in order to reduce its debt and lower its annual cash interest expense. It noted that it was continuing to execute the plan announced in February to focus its capital and efforts on Windstar Cruises and the small ship luxury segment.

As already noted, Ambassadors sold the housing portion of its travel and events division and its marine group and recently entered into agreements to dispose of its CypressReinsurance business and sell the vessel Queen of the West to Blue Spruce LLC, an affiliate of American Cruise Lines.

Globic Advisors was information agent for the exchange (212 227-9699).

Ambassadors is a Seattle-based cruise company.

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