Isramco (Nasdaq: ISRL; TASE: ISRA.L) yesterday announced that its wholly owned subsidiary, Magic 1 Cruise Line, Corp., entered into a lease agreement pursuant to which it will lease the cruise liner Mirage 1 to a cruise line tour operator for the period from April 14, 2005 through October 31, 2005 at a daily rate of $8,000.
The tour operator will operate the cruise liner on a "bareboat lease" basis under which it will solely bear all outlays associated with the operation, maintenance and upkeep of the cruise liner.
Isramco purchased the Mirage 1, a luxury cruise liner containing 270 passenger cabins spread out over nine decks, in March 2004.
The tour operator entered into a marketing agreement with a subsidiary of Israeli transportation company Egged, pursuant to which Egged's subsidiary has undertaken to promote and market tours on the Mirage 1. Under the marketing agreement, the tour operator is entitled to minimum payments from Egged's subsidiary.
In order to assist in the promotion and marketing of Mirage 1 tours, Isramco furnished a guarantee in favor of Egged's subsidiary, indemnifying it against any damages up to a maximum amount of $1 million that the subsidiary may suffer as a result of breach of the marketing agreement by the tour operator.
The tour operator will provide Isramco with a bank guarantee in the amount of $600,000 and will grant Isramco a lien on all amounts due to the tour operator under the marketing agreement in order to secure the tour operator's obligations under the lease agreement and to reimburse Isramco for any damages it might suffer due to its guarantee.
Published by Globes [online], Israel business news - www.globes.co.il - on Wednesday, March 16, 2005