Black Ink From The Mississippi?

The waters haven't been kind to American Classic Voyages (AMCV): In the past three years, the river-cruise line has drifted into the red. But its stock, which dipped to 9 from a high of 12 5/8 in February, has made a comeback: It closed above 11 on Aug. 5. What's up?

One big stakeholder who has been a steady buyer despite the losses is Chairman Sam Zell, a real estate mogul and financier. Equity-DQSB--a group that includes Zell and American Classic directors Arthur Greenberg, Ann Lurie, and Sheli Rosenberg--holds 51% of the stock. The curious thing is that, on July 31, the board authorized repurchase of 1 million shares on the open market or in negotiated transactions. American Classic has 13.9 million shares outstanding.

Some pros believe Zell is preparing to take the company private in a leveraged buyout. "American Classic is an attractive target for larger cruise-line companies," says one money manager who has been snapping up shares. "In the past two weeks, more market makers have come into the stock, suggesting a surge of new interest," says one trader.


American Classic has three paddle-wheel steamers that cruise the Mississippi. One of its ships, the Delta Queen, is a National Historic Landmark. Another ship, the Mississippi Queen, carries 416 passengers, and its newest vessel, the American Queen, has a capacity of 436 passengers. American Classic also owns the 582-foot Independence, which cruises the Hawaiian islands.

Analyst Phil Fisher of San Francisco's Genesis Merchant Group Securities figures American Classic will be in the black soon, earning 36 cents a share in 1997 and 77 cents in 1998. The buyback would add 6 cents to earnings, he says. American Classic CEO Philip Calian says the buyback supports "the good investment value in the stock that the market doesn't perceive."

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