UK - Standard & Poor's, the global rating agency, said yesterday that it had revised its CreditWatch implications to developing from negative on UK-based cruise operator P&O Princess Cruises.
This action follows news that the shareholder vote on the proposed merger with Royal Caribbean Cruises has been postponed indefinitely after an unsolicited bid from Carnival Corp.
The ratings on P&O Princess were initially placed on CreditWatch with negative implications on November 20, 2001 to reflect a material increase in financial leverage, which the company is likely to incur if the proposed merger with Royal Caribbean goes ahead.
The revised CreditWatch status reflects the increased chances of P&O Princess' merger with the higher rated Carnival. Standard & Poor's believes the capital structure of the combined entity, based on Carnival's most recent offer, may be sufficiently robust to warrant a higher rating.
The vote on the proposed merger with Royal Caribbean has been delayed in order to allow shareholders to give more consideration to Carnival's latest bid.
The credit quality of the proposed P&O Princess/Carnival business will only be determined once the eventual cash component of Carnival's revised offer is established, said Standard & Poor's credit analyst Anna Overton.
Any potential benefits of an initially stronger financial profile must be weighed against the uncertainty of the industry's ability to stabilise yields after a difficult 2001.
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