Company Press Release: Sea Containers Ltd.
June 9, 2000
HAMILTON, Bermuda -- At the annual meeting of shareholders held Wednesday in New York, James B. Sherwood, President
of Sea Containers Ltd. (NYSE: SCRA, SCRB; http://www.seacontainers.com)
said that the company was considering a plan to sell a $250 million amortizing bond to a U.K. financial institution
secured by the cash flows of its Irish Sea ferry business and to use the proceeds to retire public debt at a significant
discount. He said that the company might additionally give investors the opportunity to swap common shares for
debt. Provided the debt could be acquired at a sufficient discount to par, the company would consider retiring
all of the $550 million of outstanding public debt. He noted that these plans were being considered in light of
exceptional concerns expressed by bondholders about the probable spin-off of Orient-Express shares following an
initial public offering planned in July. ``I can appreciate that debt holders see Sea Containers' earnings declining
if Orient-Express is spun off. I would point out, however, that from your Board's viewpoint a substantial amount
of new cash is coming into Sea Containers as a result of the IPO and both container and passenger transport earnings
should in due course make up for the loss of profits from Orient-Express Hotels,'' Mr. Sherwood said.
In reviewing the company's operations, Mr. Sherwood indicated that earnings from the company's marine container
leasing activities should rise quarter by quarter this year, starting with the second quarter, but would probably
not surpass those of 1999 until 2001 and thereafter. Passenger transport operating profits might be down relative
to the 1999 results due to higher fuel prices this year and a decline in English Channel ferry volumes caused by
higher fares. Fares had to be increased because of loss of profits due to cessation of duty free sales. Effective
July 1, 1999 The European Union prohibited duty free sales to persons moving between member countries. He noted
that the company hoped to offset these declines by profits from the sale of some of its U.K. port interests this
year. Earnings from GNER should be much higher in 2001 and 2002 because there will be only a very small subsidy
reduction while volumes and prices should continue to increase.
Before the initial public offering of Orient-Express Hotels, a special general meeting of Sea Containers shareholders
will be held to vote on resolutions which will facilitate the spin-off of the company's shares in Orient-Express
Hotels to Sea Containers shareholders in 2001. The spin-off would be subject to various consents and the opinion
of the company's tax advisors that such a spin-off would not be taxable to the U. S. recipients.
Mr. Sherwood stressed that while a spin-off of Orient-Express Hotels would cause a dilution of Sea Containers'
earnings from leisure in the second half of the year, he felt that the benefit of new capital coming into the company
from the sale of Orient-Express Hotels shares would offset such dilution.
The U.K. government has indicated its intention to decide in July on the company's application for a new 20-year
rail franchise, Mr. Sherwood said. The revised application for the franchise is to be submitted on June 26. The
current franchise expires in 2003.
Sea Containers will maintain its existing dividend policy and review it once the initial public offering of Orient-Express
Hotels is completed.
This press release contains, in addition to historical information, forward-looking statements that involve risks
and uncertainties. These include statements regarding earnings growth, capital expenditure and investment plans
and similar matters that are not historical facts. Such statements are based on management's current expectations
and are subject to a number of uncertainties and risks that could cause actual results to differ materially from
those described in the forward-looking statements. Factors that may cause such a difference include, but are not
limited to, those mentioned in the press release, customer demand and competitive considerations, inability to
increase prices or reduce costs, seasonality and adverse weather conditions, changes in new container prices from
manufacturers, shifting patterns of world trade, the effects of cessation of duty free shopping privileges in the
European Union, uncertainty of achieving a GNER franchise replacement and acceptability of proposed terms, market
conditions relating to a possible public offering of Orient-Express Hotels shares or a possible debt/equity exchange
of the company, interest rate and currency value fluctuations, changes in investment and capital expenditure proposals
or their terms, uncertainty of completing proposed purchase or sale transactions, adequate sources of capital and
acceptability of finance terms, global and regional economic conditions, and legislative, regulatory and political
developments. Further information regarding these and other factors is included in the company's reports filed
with the U.S. Securities and Exchange Commission.
SOURCE: Sea Containers Ltd.