Duke Royalty river cruise finance paying off. Duke‘s inaugural royalty investment, successfully launched its maiden voyage for its third vessel, the Carmen. Duke says that this marks a memorable day for Temarca and demonstrates the rapid progress made since Duke’s EUR8 million royalty investment which was concluded in April 2017.
In response to the growing demand from Temarca’s customers, Duke is pleased to report that all three vessels are now sailing on the Rhine and Danube and each have sold out their total capacity for the remaining sailing season for 2017 as well as for the entire sailing season for 2018. The sailing season encompasses 220 days from April – October but during the non-sailing season, Temarca is able to generate incremental revenues from its vessels by using them as mobile hotels as well as for corporate receptions and other functions.
The financing provides growth for Duke’s shareholders by participating in the revenue growth of Temarca on an annual basis. Given that the contracted sailing days for the Temarca fleet has grown 33 per cent., Duke is confident that it will benefit from the maximum possible increase in its royalty payment of 6 per cent. when the annual reset is made in July 2018. Additionally, given that the contracted sailing days for the fleet in 2018 is already up 9 per cent. from 2017, this bodes well for a further increase in the royalty payment at the annual reset in July 2019 as well.
Temarca is a Netherlands based river cruise provider that offers luxury four-star multiday riverboat cruises on Europe’s main rivers, the Rhine and Danube, covering an area stretching from the North Sea to the Black Sea. Founded in 1997 and family owned, Temarca has grown to become an established European river cruise provider with more than 100 employees and a fleet of three vessels. Temarca works with 28 different travel agencies across Europe, North America, and South Africa to design unique trips for its customers. Such travel agencies buy boat capacity approximately one year in advance of sailing. In order to accommodate strong and growing demand for river boat cruises, this financing allows Temarca to expand and update their fleet.
Under the terms of the financing, Duke is providing EUR8.0 million (approximately GBP6.9 million) to Temarca with an option at Duke’s sole discretion to provide an additional EUR2.0 million (approximately GBP1.7 million) for a period of 12 months. The first tranche of the financing will entitle Duke to monthly distributions beginning in May 2017 which totals over EUR1.0 million (approximately GBP0.9 million) on an annual basis, equating to a cash-on-cash yield of approximately 13 per cent. The distribution will be adjusted annually with the first adjustment occurring on 1 July 2018 based on the percentage change in Temarca’s gross revenues for the year to 31 December 2017 compared to the prior year. The annual adjustment in the distribution will be subject to a collar. The term of the financing is for a period of 25 years, will be senior secured and Duke has provided Temarca with a buyback option.
DUKE : Duke Royalty river cruise finance paying off