Sep. 25, 2009 (PR Newswire) -- SEATTLE, Sept. 25 /PRNewswire-FirstCall/ -- Ambassadors International, Inc. (the "Company") (Nasdaq: AMIE) today announced that it has commenced an exchange offer (the "Exchange Offer") for any and all of the Company's $97 million of outstanding 3.75% Convertible Senior Notes due 2027, CUSIP Nos. 023178AA4 and 023178AB2 (the "Convert Notes").

Upon the terms and subject to the conditions of the Exchange Offer, the Company is offering for each $1,000 principal amount of Convert Notes validly tendered:

--  230.3766 shares of the Company's common stock ("Common
Stock"); plus

--  $273.1959 principal amount of the Company's 10% Senior Secured
Notes due 2012 (the "New Notes").

If all of the $97 million in outstanding Convert Notes are validly tendered and accepted in the Exchange Offer:

--  the Company will issue approximately 22.3 million new shares of Common
Stock, which will represent approximately 66.67% of the Company's
outstanding Common Stock immediately following the Exchange Offer;
--  the Company will issue $26.5 million in aggregate principal amount of
New Notes in the Exchange Offer; and

--  the Company's outstanding debt will be reduced by $70.5 million.

Holders of approximately 59.5% of the aggregate principal amount of Convert Notes have entered into separate exchange offer commitment and support agreements with the Company pursuant to which such holders have agreed, subject to the terms of such agreements, to tender their Convert Notes in the Exchange Offer.

Interest on the New Notes will be payable in kind or in cash, at the Company's option. Certain of the Company's existing and future subsidiaries will fully and unconditionally guarantee the Company's obligations under the New Notes on an unsubordinated, secured basis. The Company will not receive any cash proceeds in connection with the Exchange Offer.

The Company is making the Exchange Offer in order to reduce its outstanding indebtedness and decrease its annual cash interest expense. The Company believes that reducing its outstanding indebtedness is appropriate in light of its ongoing restructuring and will promote its long-term financial viability. Moreover, reducing its annual interest expense should make additional cash available to fund operations.

The Company continues to execute the plan announced in February 2009 to focus all capital and efforts on Windstar Cruises and the small ship luxury segment.