Genting moves on Lloyd Werft
Genting Hong Kong, the owner of Star Cruises and Crystal Cruises as well as a significant shareholder in NCL Holdings has acquired a stake in German Shipyard Lloyd Werft.
For EUR17.5 million the company has acquired a controlling stake in the shipyard. acquiring a 50% ownership of the land the shipyard is on as well as a 70% stake holding the new build business.
This acquisition follows Crystal’s huge expansion plans which see the company launch three new ice class cruise ships and two river cruise vessels. German built cruise ships, like their cars, are very much in demand at the moment with Meyer Werft have a strong order book and having acquired the former STX yard in Turku.
Lloyd Werft requires a significant amount of capital expenditure to ready itself for the cruise ship construction, which is what has prompted Genting’s investment. The state of Bremen is also investing EUR45 Million in the yard infrastructure to accommodate the new building programme.
The company is no stranger to the cruise business having lengthened several of the Star Cruises fleet and completing re-engining of the QE2. The company has previously built cruise ships – having built Norwegian Sun and completed Norwegian Sky, which had been part built as Costa Olympia. The last cruise ship to be completed at the yard was NCL’s Pride of America, which sank in bad weather delaying delivery meaning the yard was hit with a $30 million late delivery penalty.
A shipping line investing in a shipyard is not uncommon, indeed the Lloyd in Lloyd Werft’s name is the same Lloyd in Hapag-Lloyd. Until the recent world recession Maersk Line owned several shipyards as part of its portfolio, however they could just not compete with Asian yards on cost and have been disposed of.
In 1989 when Wartsila Marine, the Finnish shipbuilding company, fell into bankruptcy. The manager of the yards, Martin Saarikangas, called Ted Arison of Carnival Cruise Lines. Carnival assisted in restarting the yards taking an 11% shareholding in what became known as Masa Yards. The company had three ships on order at the time, with the Fantasy near competition, and Ecstasy and Sensation due to start construction.
In 1991 following the competition of the yards restructure Carnival no longer considered its investment in the company necessary and the shareholdings were sold. Since then no cruise line has significantly invested in a shipyard.
It will be interesting to see if Genting retain its holding following construction with NCL, Oceania, Regent, Crystal and Star all associated companies the yard could remain busy for these lines however I cannot see Royal Caribbean or Carnival being willing to disclose their newbuild plans with a yard part owned by its competitors.