In 1992, Rederi AB Slite, a Swedish shipping company that ran a ferry between Sweden and Finland for the Viking Lines, should have taken delivery of a very large ship. She had been ordered some years...

In 1992, Rederi AB Slite, a Swedish shipping company that ran a ferry between Sweden and Finland for the Viking Lines, should have taken delivery of a very large ship. She had been ordered some years before from Meyer Werft in Papenburg, Germany. At the time of signing the purchase contract, Slite had decided not to hedge the dem outow because the sek was tied to a basket in which the dem had a large weight, and because the dem was at a substantial forward premium relative to the sek. However, by September 1992, Sweden had been forced to abandon the link between the sek and the dem, which had appreciated substantially against the sek by the end of 1992. As a consequence of the appreciation of the dem, Slite could no longer a_ord the ship (which was already painted in Viking's red&white colors, see picture 1). So Meyer Werft kept it and soon managed to charter it to Viking Line's rival, Silja Line, which repainted it (white, mostly, picture 2), named it Silja Europe and put it on the|you guessed it|Stockholm-Helsinki line.3 A few Outright bankruptcy is costly because of the costs associated with liquidation.