NCL Corporation Ltd. (NCLC), a subsidiary of Norwegian Cruise Line Holdings Ltd has announced that it entered into an agreement to sell $700.0 million aggregate principal amount of 4.750% senior unsecured notes due December 2021 in a private offering that are to be issued at par, the company said in a statement.
The company said it intends to use the net proceeds from the Offering, after deducting the initial purchasers' discount and estimated fees and expenses, together with cash on hand, to purchase any and all of its outstanding 5.25% senior notes due 2019 that are validly tendered and accepted for purchase in the previously announced tender offer and to redeem and satisfy and discharge any 5.25% Senior Notes not purchased in the tender offer.
Princess Cruise Lines Ltd. (Princess), part of Carnival Corporation & plc, has agreed to plead guilty to seven felony charges stemming from its deliberate pollution of the seas in the waters of the US and the UK and intentional acts to cover it up, the US Department of Justice said in a statement.
“Princess will pay a $40 million penalty– the largest-ever criminal penalty involving deliberate vessel pollution – and plead guilty to charges related to illegal dumping of oil contaminated waste from the Caribbean Princess cruise ship,” the department said.
As part of the plea agreement with Princess, cruise ships from eight Carnival group companies (Carnival Cruise Line, Holland America Line N.V., Seabourn Cruise Line Ltd. and AIDA Cruises) will be under a court supervised Environmental Compliance Program (ECP) for five years. The ECP will require independent audits by an outside entity and a court appointed monitor.
The charges to which Princess will plead guilty concern the Caribbean Princess cruise ship, which visited various U.S. ports in Florida, Maine, Massachusetts, New Jersey, New York, Puerto Rico, Rhode Island, South Carolina, Texas, U.S. Virgin Islands and Virginia.
The U.S. investigation was initiated after information was provided to the U.S. Coast Guard by the British Maritime and Coastguard Agency (MCA) indicating that a newly hired engineer on the Caribbean Princess reported that a so-called “magic pipe” had been used on Aug. 23, 2013, to illegally discharge oily waste off the coast of England.
“The whistleblowing engineer quit his position when the ship reached Southampton, England. The chief engineer and senior first engineer ordered a cover-up, including removal of the magic pipe and directing subordinates to lie. The MCA shared evidence with the U.S. Coast Guard, including before and after photos of the bypass used to make the discharge and showing its disappearance,” the department said.
The U.S. Coast Guard conducted an examination of the Caribbean Princess upon its arrival in New York City, New York, on Sept. 14, 2013, during which certain crew members continued to lie in accordance with orders they had received from Princess employees.
According to papers filed in court, the Caribbean Princess had been making illegal discharges through bypass equipment since 2005, one year after the ship began operations. The discharge on Aug. 26, 2013, involved approximately 4,227 gallons, 23 miles off the coast of England within the country’s Exclusive Economic Zone. At the same time as the discharge, engineers simultaneously ran clean seawater through the ship’s overboard equipment in order to create a false digital record for a legitimate discharge.
Caribbean Princess used multiple methods over the course of time to pollute the seas. Prior to the installation of the bypass pipe used to make the discharge off the coast of England, a different unauthorized valve was used.
When the Department of Justice investigative team conducted a consensual boarding of the ship in Houston, Texas, on March 8, 2014, they found the valve that crew members had described. When it was removed by Princess at the department’s request, it was found to contain black oil.
In addition to the use of a magic pipe to circumvent the oily water separator and oil content monitor required pollution prevention equipment, the U.S. investigation uncovered two other illegal practices which were found to have taken place on the Caribbean Princess as well as four other Princess ships – Star Princess, Grand Princess, Coral Princess and Golden Princess.
One practice was to open a salt water valve when bilge waste was being processed by the oily water separator and oil content monitor. The purpose was to prevent the oil content monitor from otherwise alarming and stopping the overboard discharge.
This was done routinely on the Caribbean Princess in 2012 and 2013. The second practice involved discharges of oily bilge water originating from the overflow of graywater tanks into the machinery space bilges. This waste was pumped back into the graywater system rather than being processed as oily bilge waste.
Neither of these practices were truthfully recorded in the oil record book as required. All of the bypassing took place through the graywater system which was discharged when the ship was more than four nautical miles from land. As a result, discharges within U.S. waters were likely.
“The pollution in this case was the result of more than just bad actors on one ship,” said Assistant Attorney General Cruden. “It reflects very poorly on Princess’s culture and management. This is a company that knew better and should have done better. Hopefully the outcome of this case has the potential not just to chart a new course for this company, but for other companies as well.”
“The conduct being addressed today is particularly troubling because the Carnival family of companies has a documented history of environmental violations, including in the Southern District of Florida,” said U.S. Attorney Ferrer.
“Our hope is that all companies abide by regulations that are in place to protect our natural resources and prevent environmental harm. Today’s case should send a powerful message to other companies that the U.S. government will continue to enforce a zero tolerance policy for deliberate ocean dumping that endangers the countless animals, marine life and humans who rely on clean water to survive,” he said in the statement.
“The safety, security and environmental stewardship of our ports, waterways and oceans is an important Coast Guard mission set and the complexity of the challenges we face today requires a global unity of effort among law enforcement partners,” said Rear Admiral Scott Buschman Commander, Coast Guard District Seven.
“I sincerely thank the U.S. Attorney and the United Kingdom Maritime and Coastguard Agency for your leadership, your collaboration and the hard work put forth to reach a plea agreement with significant penalties that serve as a clear warning to all polluters.”
“This shows just how well the UK and US can work together on these kind of cases,” said Jeremy Smart, head of enforcement at the Maritime & Coastguard Agency of the United Kingdom. “It also sends a clear message to the industry that this kind of pollution practice will not be tolerated anywhere in the world. It also shows that we will always take any information we are given by those who report such practices to us very seriously and will act upon it.”
In addition to the criminal information, a plea agreement and joint factual statement were today filed in court in Miami. Photographs of some of the evidence provided by the whistleblower and obtained by the government were also filed in federal court. In the factual statement, Princess also admitted to the following:
Illegal discharges took place on the Caribbean Princess dating back to 2005, one year after the vessel started operations, as part of a conspiracy to violate the Act to Prevent Pollution from Ships and to obstruct justice.
Different bypass methods were used over the course of time, including a “magic pipe” used to transfer oily waste overboard. After learning that an engineer had blown the whistle, senior ship engineers dismantled the bypass pipe and instructed crew members to lie. Prior to the MCA boarding, the chief engineer and senior first engineer ordered crew members to lie. Following the MCA’s inquiry, the chief engineer held a sham meeting in the engine control room to pretend to look into the allegations while holding up a sign stating: “LA is listening.”
The engineers present understood that anything said might be heard by those at the company’s headquarters in Los Angeles, California, because the engine control room contained a recording device intended to monitor conversations in the event of an incident.
When using the magic pipe, engineers processed sea water through the oily water separator in order to create a digital record to account for the missing waste. Shore-side management failed to provide and exercise sufficient supervision and management controls to prevent or detect criminal violations by Caribbean Princess crew members.
A perceived motive for the crimes was financial – the chief engineer that ordered the dumping off the coast of England told subordinate engineers that it cost too much to properly offload the waste in port and that the shore-side superintendent who he reported to would not want to pay the expense. Princess engineers on the Caribbean Princess indicated that the chief engineer responsible for the discharge on Aug. 26, 2013, was known as “broccino corto” (a person with short arms), an Italian expression for a cheap person whose arms are too short to reach his wallet. Some expressed the same opinion of the shore-side superintendent.
Graywater tanks overflowed into the bilges on a routine basis and were pumped back into the graywater system and then improperly discharged overboard when they were required to be treated as oil contaminated bilge waste. The overflows took place when internal floats in the graywater collection tanks got stuck due to large amounts of fat, grease and food particles from the galley that drained into the graywater system.
Graywater tanks overflowed at least once a month and, at times, as frequently as once per week. Princess had no written procedures or training for how internal gray water spills were supposed to be cleaned up and the problem remained uncorrected for many years.
Princess discovered “stub pipes” along the entire length of the ship for the apparent purpose of pumping graywater overflows into the bilges back into the graywater system and subsequently overboard. According to papers filed in court, Princess has undertaken remedial measures in response to the government’s investigation, including upgrading the oily water separators and oil content monitors on every ship in its fleet and instituting many new policies.
If approved by the court, $10 million of the $40 million criminal penalty will be devoted to community service projects to benefit the maritime environment; $3 million of the community service payments will go to environmental projects in South Florida; $1 million will be earmarked for projects to benefit the marine environment in United Kingdom waters.
Carnival Corporation & plc group has decided to return the 2001 built Adonia of 30,277 gross tons to P&O Cruises in the UK from Fathom, the US based social impact travel brand of the group, which has operated it since last year.
“As the Fathom experience has been expanded across many Carnival brands sailing to the Dominican Republic and beyond, we are pleased to let you know that we have Adonia, our well loved small ship, sailing a range of discovery itineraries from June 2017. These will be on general sale from December 8, 2016,” said Michele Andjel, PR director of P&O Cruises in Southampton, in a written response emailed to Cruise Business Online.
However, she did not comment on a report on Cruise Week that the Carnival group would seek to use a Fantasy class ship of its Carnival Cruise Line brand on cruises to Cuba, where Adonia has called under the Fathom house flag.
The sixth Madrid International Cruise Summit was successfully concluded this afternoon (23 November). This year’s main focus was firmly on orderbooks and how to fill the new ships.
Already with more than 70 newbuildings ordered and many more expected, the questions asked during the summit were naturally about where to deploy them and how to fill them. As usual, there were calls from industry leaders and stakeholders to work together to market cruise as a value-for-money holiday option, to educate the public about cruising, and to communicate its benefits.
Filling these ships is becoming a priority for the future viability of the industry; but there are many challenges it must confront, not least the traditional ones concerning geopolitical, macro-economic, and demographics issues. Moreover, like everyone else the cruise industry now faces new uncertainties brought about by such event as Brexit and Trump presidency.
As well as acknowledging the challenges, the industry also sees opportunities everywhere, including in Turkey where there is a market with 80 million inhabitants. Marketing, seeking out new destinations, and travel agent training are still deemed to be key to the future of this sector.
Our correspondent was again in attendance and was a speaker at the summit. These topics will be explored further in a full-length article planned for the Spring 2017 issue of Cruise Business Review.
Viking Line plc, the Finnish cruise ferry operator, said it hass signed a letter of intent with Xiamen Shipbuilding Industry Co. Ltd in China concerning an order for a 63,000 gross ton cruise ferry to be delivered in the spring of 2020.
“The aim is to sign a final agreement during the spring of 2017. The total investment is about €190 million euros. The letter of intent also includes an option for an additional vessel. The vessel is intended to be a collaborative project, and the plan is to engage a number of Finnish and other European suppliers, including Deltamarin, Wärtsilä and ABB Marine as well as a number of others,” the company said in a statement.
The new vessel is planned to serve the 10 hour crossing between Turku (Finland)-Åland Islands (Finland)-Stockholm (Sweden) and it will be 218 metres in length and have a gross registered tonnage of 63,000. Passenger capacity will be 2,800 and the length of its cargo lanes will be 1,500 metres. Viking Line will hire Scandinavian architects for the interior design, the company said.
This is the first cruise ferry type vessel with emphasis on high quality passenger accommodation that will be built in China for a customer in the west.