indebted Bermuda-registered Kloster Cruise Ltd., Lloyd's List said.

The move, apparently prompted by fear that a Kloster collapse and fleet sale would threaten the stability of the cruise market, would give Panama-registered Carnival control of Kloster.

Carnival is considering buying $300 million of Kloster bonds, issued as part of an earlier restructuring but now threatening the company.

The purchase by Carnival would leave the company in control of Kloster.

Kloster is facing a new credit problem over the repayment of a $20 million coupon on the bonds which may prompt bondholders to favour liquidation of the company.

The bonds have been trading at 75 percent of their face value, allowing Carnival to buy the debt for significantly less that $300 million.

"Carnival has retained Salomon Brothers to put together a restructuring plan for Kloster and representatives of Salomon met with representatives of the (Kloster) bondholder group,'' Carnival media relations director Mr. Tim Gallagher said yesterday.

Other details could not be discussed at this time, he said.

Kloster's parent company is Bermuda-registered Vard AS, which is controlled by Norex & Co.

Carnival recently reported continued good profit growth from its core operations, Carnival Cruise Lines and premium market Holland America Line.

And the company, currently amid fourth quarter, is on pace for a record year, said Mr. Gallagher.

Kloster operates Royal Cruise Line, Royal Viking Line and Norwegian Cruise Line (NCL), whose 1,000 passenger ship Dreamward is a regular summer caller to Bermuda.

Kloster has also applied for approval to merge with Royal, which has been described as Kloster's most problematic line.

Mello, Hollis, Jones & Martin is the local law firm acting for the applicants.