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Sea Containers Ltd/NY – ‘424B5’ on 4/29/04

On:  Thursday, 4/29/04, at 5:06pm ET   ·   Accession #:  912057-4-443   ·   File #:  333-11588

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/29/04  Sea Containers Ltd/NY             424B5                  1:1.7M                                   Merrill Corp/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 424B5       Prospectus                                          HTML   1.53M 

Filed pursuant to Rule 424(b)(5)
Registration No. 333-011588

P R O S P E C T U S    S U P P L E M E N T
(To Prospectus Dated April 15, 2004)

$103,000,000

Sea Containers Ltd.

10¹/2% Senior Notes due 2012

        The notes will bear interest at the rate of 10¹/2% per year. Interest on the notes is payable on May 15 and November 15 of each year, beginning on November 15, 2004. The notes will mature on May 15, 2012. We may redeem some or all the notes at any time on or after May 15, 2008. The redemption prices are given under the caption "Description of the Notes—Optional Redemption." We also have the right to redeem all of the notes if, at any time, changes in law require us to withhold taxes from payments on the notes.

        The notes will be our general unsecured obligations and will rank equally with all of our other unsecured unsubordinated indebtedness.

        Investing in the notes involves risks. See "Risk Factors" beginning on page S-18.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        Interest on the notes will accrue from May 4, 2004 to date of delivery.

        The underwriters expect to deliver the notes to purchasers on or about May 4, 2004.

Sole Book-Running Manager
Citigroup

Co-Managers

April 28, 2004

        You should rely only on the information contained in or incorporated by reference in this prospectus supplement or in the accompanying prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in or incorporated by reference in this prospectus supplement or the accompanying prospectus is accurate as of any date other than the date on its front cover page.

TABLE OF CONTENTS

S-2

Summary

        This summary highlights information contained elsewhere in this prospectus supplement and the accompanying prospectus, including the documents incorporated by reference. It does not contain all the information that may be important to you. Before you decide whether to invest in the notes, you should read carefully this entire prospectus supplement and the accompanying prospectus, including the "Risk Factors" section below and the reports which we have filed with the Securities and Exchange Commission and which are incorporated by reference in this prospectus supplement and the accompanying prospectus, including Sea Containers' Annual Report on Form 10-K for the fiscal year ended December 31, 2003, which is attached to this prospectus supplement as Appendix A.

        The terms "Sea Containers," "the company," "we," "us," and "our" as used in this prospectus supplement refer to Sea Containers Ltd. and its subsidiaries as a combined entity, except where it is clear that such term means only Sea Containers Ltd. Throughout this prospectus supplement, we refer to the 10¹/2% senior notes due 2012, as governed by the indenture described herein, as the "notes."

Sea Containers Ltd.

        Sea Containers and its subsidiaries engage in four main businesses:

•

ferry operations involving high speed and conventional passenger and vehicle ferry services in the Baltic Sea, English Channel, Irish Sea, Adriatic Sea and New York harbor;



•

high speed passenger rail operations in Britain between London and Scotland;



•

the leasing of marine cargo containers, principally through GE SeaCo SRL, Sea Containers' unconsolidated 50/50 joint venture with General Electric Capital Corporation, to a diversified customer base of liner ship operators and other transport companies throughout the world, and the manufacture and repair of container equipment; and



•

the ownership (or part ownership) and management of luxury hotels, restaurants, tourist trains and a river cruiseship throughout the world through Orient-Express Hotels Ltd., a New York Stock Exchange-listed company in which Sea Containers has a 42% equity interest. Since the fourth quarter of 2002, Orient-Express Hotels' financial results have not been consolidated with those of Sea Containers.

        In 2003, we generated revenue of $1.7 billion and EBITDA of $319 million. See footnote 8 to "Summary Consolidated Financial Data" below for reconciliations of EBITDA data herein to cash flow from operating activities under U.S. generally accepted accounting principles.

Ferry Operations

        Our Silja subsidiary operates a fleet of large multipurpose passenger and freight ferries, as well as smaller fast ferries in the Baltic Sea. Our U.K. ferry services operate on routes between England and France and between Scotland and Northern Ireland. We also operate a commuter ferry service in New York harbor and, in a joint venture with an unaffiliated party, a ferry service in the Adriatic Sea between Italy and Croatia. In addition to revenue from ticket sales, we derive substantial revenue from on-board catering, entertainment and retail sales, including duty-free sales on some of Silja's ferry routes.

        In 2003, our ferry operations transported approximately 8.1 million passengers and 1.0 million vehicles and generated revenue of $787 million and EBITDA of $82 million.

S-3

Rail Operations

        In 1996, the British government awarded us a seven-year franchise to operate the Great North Eastern Railway, or GNER, the high-speed passenger rail service along the east coast of Great Britain between London and Scotland and between London and Leeds. Since acquiring the GNER franchise, we have improved service, increased traffic volume and reduced unit costs. GNER is now one of the few U.K. franchises that no longer receives a government subsidy. Our franchise was extended in 2002 and now expires in April 2005. We plan to apply to the British government for a seven to ten year renewal.

        In 2003, our rail operations transported over 15 million passengers, covered more than 11 million train miles and generated revenue of $723 million and EBITDA of $97 million.

Marine Container Leasing

        Through our GE SeaCo joint venture, we lease cargo containers to a diversified customer base of liner ship operators and others throughout the world. We formed GE SeaCo in May 1998 by combining the container leasing businesses of Sea Containers and GE Capital to create one of the largest container leasing companies in the world and thereby benefit from economies of scale. GE SeaCo provides standard dry cargo containers as well as specialized containers used to transport cargoes not suited to standard dry cargo units, such as perishable food items, liquids and heavy machinery. Lease rates for specialized containers are often less volatile and often yield higher margins than for standard dry cargo containers.

        In addition to leasing containers which it owns, GE SeaCo manages and leases out containers owned by Sea Containers and GE Capital. Sea Containers itself also leases out a small fleet of containers outside the joint venture, and owns and operates container factories and depots and refrigerated and tank container service businesses. GE SeaCo's financial results are not consolidated with those of Sea Containers.

        In 2003, our marine container operations generated revenue of $133 million and EBITDA of $83 million, which include in both cases $23.7 million of net earnings from GE SeaCo accounted for under the equity accounting method. In 2003, GE SeaCo generated revenue of $99 million and net earnings of $44 million.

Leisure Investment

        Sea Containers' leisure operations are conducted through Orient-Express Hotels. Orient-Express Hotels currently owns or part owns and manages 39 distinctive properties including 30 deluxe hotels, three restaurants, five tourist trains and a river cruiseship, and has an investment in and provides marketing services for an additional five deluxe hotels. Altogether, these properties are located in 21 countries.

        In August 2000, we sold a portion of our interest in Orient-Express Hotels in its initial public offering. In 2002, following a restructuring of Sea Containers' ownership interest in Orient-Express Hotels and further public sales of Orient-Express Hotels shares, Orient-Express Hotels became less than majority-owned by Sea Containers, so that its results of operations are no longer consolidated with those of Sea Containers. Sea Containers currently owns 42% of the common shares of Orient-Express Hotels Ltd. (disregarding the shares owned by a wholly-owned subsidiary of Orient-Express Hotels).

        Orient-Express Hotels' class A common shares are listed on the New York Stock Exchange under the symbol "OEH." Orient-Express Hotels had a market capitalization of approximately $571.6 million on April 27, 2004. In 2003, Orient-Express Hotels generated revenue and earnings from unconsolidated companies of $325 million, and net earnings of $24 million, of which $10.9 million have been included in Sea Containers' 2003 results under the equity accounting method.

S-4

Competitive Strengths

General

        Ability to identify growth opportunities and to grow our businesses.    We believe that Sea Containers has been successful in identifying undervalued businesses and capitalizing on the growth opportunities presented by those businesses. For example,

•

in 1996, we identified the opportunities presented by the British government's auction of the franchise to operate the high-speed passenger rail service between London and Scotland. Since we acquired the GNER franchise, we have increased operating earnings by 350%, increased ridership by 18% and increased daily train services up to 122 from 100;



•

in 1999, we acquired a 50% interest in Silja, and the balance in 2002, and during our period of ownership, we have increased Silja's operating earnings (excluding non-recurring items) from $22.9 million in 2000 to $42.9 million in 2003; and



•

in 2002, Orient-Express Hotels acquired the hotels La Residencia in Mallorca, Spain and Le Manoir Aux Quat' Saisons in Oxford, England at attractive prices.

        Superior customer service.    We believe that our ferry and rail operations are well recognized in each of their markets for providing superior customer service. For instance, in 2001, GNER was awarded a prize for its customer service in the U.K. Railway Innovation Awards and, in 2000, GNER received the Customer Service and the Best Customer Experience prizes in the U.K. Railway Innovation Awards and National Rail Awards, respectively, as well as other prizes and commendations over the years. In 2002, Silja was selected in the annual CRM Grand Prix competition arranged by Teleperformance Finland as Finland's most successful customer service company among 86 Finnish customer service companies in various industry sectors.

        Realizing value in our businesses.    Our management teams are focused on realizing value from each of our businesses. For example, we significantly increased the operating earnings of the Isle of Man Steam Packet Company, from $8.9 million in 1996, when we increased our ownership interest in this company to 100%, to $19.7 million in 2002. Reflecting our view that the remaining potential increase in value of the business was limited, we sold it in July 2003 at a substantial gain of $100 million. Also in 2003, Orient-Express Hotels realized a $4.3 million profit from its sale of Hotel Quinta do Lago in Portugal.

        In 2000, we decided that the best strategy for Sea Containers and its shareholders to realize the value of our leisure properties was to transfer all of them to Orient-Express Hotels and make it a separate public company. In 2000, we and Orient-Express Hotels sold approximately 37% of the equity shares in Orient-Express Hotels in connection with its initial public offering. Subsequently, when market values were attractive and to deconsolidate Orient-Express Hotels from our balance sheet, we sold additional shares.

        Diverse business portfolio.    We believe that, as compared to one-segment business enterprises, we are less reliant upon any single market, and that our business diversity limits our exposure to economic cycles. Each of our businesses—ferries, rail, container leasing and leisure—is affected to a degree by seasonality and by periodic cyclical downturns. However, they are rarely affected simultaneously.

S-5

Ferry Operations

        Recognizable brand; a market leader.    We believe each of our ferry services—Silja, Hoverspeed and SeaStreak—is well recognized in the market in which it operates. Silja is one of the leaders in the Baltic Sea in passenger and freight ferries with a 34% market share in 2003 based on revenue.

        Diversity of our customer base and our revenue stream.    We provide services to a range of customer traffic, including leisure and business passengers and, for Silja, freight operators, which makes us less vulnerable to market fluctuations relating to any single segment of our customers. In addition, our revenue is generated from a variety of sources. In the case of Silja, for example, in 2003 we derived 28% of our revenue from ticket sales, 62% from on-board services such as catering, duty-free shopping and other retail sales, and 10% from cargo transport services.

        Barriers to entry.    The capital costs associated with launching a regularly scheduled ferry service can be significant, in particular the costs associated with the purchase of vessels. In some cases, securing ferry berths in the relevant ports is difficult. Also, the Baltic region in which Silja operates provides a natural geographic barrier to competition from cars and trains. Budget airlines compete for passengers on our longer routes, but we believe that Silja affords a superior minicruise experience and our fast ferries enable passengers to make relatively quick crossings with their cars.

        Significant growth opportunity in the Baltic Sea.    In 2003, Silja was a leading ferry operator in the Baltic Sea based on passenger volume and revenue. With Estonia joining the European Union in May 2004, our fastest growing sector is likely to be services to that country from Finland. We plan to grow our business in the Baltic by adding freight capacity on routes between Finland and Estonia, replacing tonnage on routes between Finland and Sweden, and starting a new route from Rostock, Germany to St. Petersburg, Russia to take advantage of the emergence of Russia as a global trading market and the growth of St. Petersburg as a tourist destination. The Finnish and Swedish governments are encouraging ferry business development in the region by reducing on-board staff payroll taxes.

Rail Operations

        Proven quality of service.    We believe GNER is recognized in Britain as one of the best franchise operators in the country. GNER runs long haul rail services transporting passengers for business, leisure and tourism, and commanding higher yields than short haul services, which have a higher proportion of regular commuters. We believe that GNER provides high-quality on-board services designed to satisfy the needs of both the leisure and the business traveller.

        Densely populated routes.    GNER's routes extend 980 miles between London and Leeds and Scotland, with 52 stations. Key destinations like London, Leeds and Newcastle are among the most populous cities in England. These important business centers are reachable from London within three hours by train, which makes the train service competitive to airlines. We also stop in Edinburgh and Glasgow, the two largest cities in Scotland.

        Well positioned for new franchises.    We believe that GNER's superior service record, and the operating improvements instituted by GNER since it was awarded its franchise in 1996, position it well in its planned bid for the renewal of the franchise in 2005 and for potential new franchise awards. Later this year, we plan to bid for the Integrated Kent franchise, for which we are currently one of four bidders on the U.K. government short list. Also, GNER intends to bid for the Greater Western franchise in the U.K. and has joined with a strong bidding partner that also operates a passenger rail franchise in Britain. GNER believes that this partnership will enhance its chances to be awarded the Greater Western franchise.

S-6

Marine Container Leasing

        A world leader.    GE SeaCo is one of the world's leading container lessors, based on the size and replacement value of its fleet. This leadership position enhances our buying power with manufacturers and gives GE SeaCo the ability to offer equipment for lease at attractive rates of return. GE SeaCo's fleet is approximately 831,000 Twenty-foot Equivalent Units, or TEU, including containers leased from and managed for Sea Containers and GE Capital. It is GE SeaCo's policy to maintain container inventories at more than 200 depots worldwide for prompt customer deliveries. It has a marketing network that covers over 80 countries with the ability to offer customers a complete range of containers for lease, including standard cargo containers, refrigerated containers, tank containers, swap-bodies and other container types for specialized use.

        Young and diversified fleet.    GE SeaCo's owned fleet of 262,000 TEU of containers, the first of which were acquired in 1998, is currently the youngest fleet in the industry, with an average age per container of less than three years. Newer equipment is often more appealing to customers. GE SeaCo has added $445 million of containers to its owned fleet over the last three years. The average original purchase cost is close to or below current newbuild prices, allowing GE SeaCo to charge competitive lease rates and achieve attractive investment returns. In addition to standard units, GE SeaCo offers its customers a diversified portfolio of specialized container equipment, as noted above, which generally provides higher margins.

        Low operating costs.    GE SeaCo's experienced container management helps it to keep repair, storage, repositioning and other operating costs low. Since 2002, for example, GE SeaCo has reduced its repositioning costs by approximately $5 million per year. Our economies of scale have enabled us to maintain low repair and storage charges at the depots we use.

        High growth market.    GE SeaCo is benefiting from the improvement of the container shipping market generally, which has seen growth of about 10% per annum in 2002 and 2003, driven by the recovering world economies and increased manufacturing in China and other Asian countries for export. Container demand is currently strong, resulting in both high utilization and improving lease rates.

Leisure Investment

        Poised for lodging market recovery.    Since 2001, while it has generally maintained its room rates, Orient-Express Hotels has experienced declines in revenue primarily due to reduced occupancy. As regional economies recover and the public's confidence in world travel returns, as we expect notwithstanding the continuing threat of terrorist acts, we believe that demand for luxury hotels and tourist products should increase. Orient-Express Hotels has continued to improve and expand existing properties and acquire new ones fitting its portfolio. Orient-Express Hotels expects to continue to benefit from favorable demographic trends in relevant age and income brackets of U.S. and European populations, and from increased on-line travel bookings. As a result, management believes that Orient-Express Hotels is well positioned to benefit from occupancy increases.

        Distinctive properties in areas where there are high barriers to entry.    Orient-Express Hotels' properties are in distinctive locations throughout the world. Many properties are part of the local history and could not be replaced or would be prohibitively expensive to replicate. Also, strict zoning regulations in a number of countries, particularly Italy, prohibit or significantly restrict new hotel development in the vicinity of Orient-Express Hotels' existing properties.

        Luxury market focus.    Orient-Express Hotels focuses exclusively on the luxury end of the leisure market. It serves those guests who are less price sensitive and are willing to pay a premium for services and accommodations which have a special image, style and character. We believe that the Orient-Express Hotels name is widely recognized as an assurance of quality.

S-7

Business Strategy

        Our business strategy is to maintain and improve our position in each of our businesses by focusing on our key strengths in each business, such as:

Ferry Operations

•

expanding through growth opportunities in both Estonia and Russia, capitalizing on Silja's strong brand recognition and market penetration;



•

focusing on the most profitable routes by increasing capacity and improving service, and continuing to assess alternatives for vessels that operate on less profitable routes; and



•

making acquisitions where we can apply our expertise and take advantage of attractive fast ferry opportunities.

Rail Operations

•

extending our GNER franchise and adding other passenger rail franchises in the U.K.; and



•

growing ridership by improving on-board and at-station services such as on-board internet access and high quality catering.

Marine Container Leasing

•

expanding containerization into developing markets such as Brazil, China, India and Russia;



•

strengthening our relationships with major shipping lines where business growth is fastest, while maintaining strong relationships with regional customers;



•

developing innovative container types, such as our patented SeaCell palletwide container which can substitute for a standard dry cargo container while affording more cubic capacity;



•

continuing to improve our fleet management to control and reduce operating costs; and



•

focusing new investment on our most successful container types.

        In addition, our general corporate strategy is to continue to reduce debt and finance costs, to extend the maturities of certain of our current debt and, when market conditions are favorable, to resume selling our remaining interest in Orient-Express Hotels.

Business History

        We began as a container leasing company in 1965, following the incorporation in New York of our predecessor, Sea Containers Inc. Sea Containers Ltd. was incorporated in Bermuda in 1974 and was listed on the New York Stock Exchange in 1976. In 1998, Sea Containers formed GE SeaCo SRL, a 50/50 joint venture with General Electric Capital Corporation organized in Barbados, through which Sea Containers currently conducts most of its container leasing activities.

        Sea Containers commenced ferry operations in the United Kingdom following the purchase of the Sealink ferry company from the British government in 1984. In 1986 we bought the Hoverspeed fast ferry business also in Britain. Sea Containers expanded its ferry services to the Baltic in 1999 through the acquisition of 50% of Silja, and it acquired the balance in 2002. Also in 1999, Sea Containers acquired the SeaStreak commuter ferry services between New York City and New Jersey. In 2003, Sea Containers sold its 100% interest in the Isle of Man Steam Packet Company Ltd., which had been acquired between 1985 and 1996.

S-8

        Sea Containers entered the high-speed passenger rail business in 1996 when the British government awarded our wholly-owned subsidiary, Great North Eastern Railway Ltd., a seven-year franchise to operate passenger trains along the east coast main line of Britain between London and Scotland. In 2002, the term of the franchise was extended to April 2005, and Sea Containers is currently planning to bid to renew this franchise for another seven to ten years, as well as to bid for two other franchises.

        Sea Containers entered the leisure business in 1976 with the acquisition of the Hotel Cipriani in Venice, Italy. Since then, this business has been continuously expanded. In 2000, Sea Containers transferred all its leisure properties to its subsidiary Orient-Express Hotels Ltd. and sold a portion of that company to the public. As a result of share sales by Sea Containers and Orient-Express Hotels since 2000, Sea Containers currently holds a 42% equity interest in Orient-Express Hotels and no longer consolidates that company's financial results with those of Sea Containers.

* * *

        You can find more detailed information concerning our businesses in Item 1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2003, which is attached to this prospectus supplement as Appendix A.

        Sea Containers maintains its registered office at 22 Victoria Street, Hamilton HM 12, Bermuda (telephone 441-295-2244). Sea Containers also has a United Kingdom service company subsidiary—Sea Containers Services Ltd.—with offices at Sea Containers House, 20 Upper Ground, London SE1 9PF, England (telephone 011-44-20-7805-5000), and a United States subsidiary—Sea Containers America Inc.—with offices at 1155 Avenue of the Americas, New York, New York 10036 (telephone 212-302-5066).

S-9

The Offering

S-10

S-11

S-12

Summary Consolidated Financial Data

        Incorporated by reference in and attached to this prospectus supplement are the audited consolidated financial statements of Sea Containers included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2003. The historical summary consolidated financial data in the table below have been derived from those financial statements and from the audited consolidated financial statements in Sea Containers' Annual Reports on Form 10-K for the fiscal years ended December 31, 2001, 2000, and 1999.

        The historical consolidated financial data for the years ended December 31, 2002 and December 31, 2003 reflect the consolidation of Silja Oy Ab effective May 1, 2002, when Sea Containers increased its interest in Silja to more than 50%. For periods ending prior to May 1, 2002, Sea Containers' interest in Silja was accounted for using the equity method of accounting. The historical consolidated financial data for the year ended December 31, 2002, also reflect the deconsolidation of Orient-Express Hotels during the fourth quarter of the year when Sea Containers reduced its interest in Orient-Express Hotels below 50%. Previously, Orient-Express Hotels was accounted for as a consolidated subsidiary of Sea Containers. Finally, the historical consolidated data for the year ended December 31, 2003, reflect the sale, effective July 1, 2003, of Sea Containers' Isle of Man Steam Packet Company Ltd. subsidiary for approximately $242,000,000 in cash, representing a gain on sale of $100,000,000. Also in the second half of 2003, Sea Containers recognized an aggregate of $46,000,000 of non-recurring charges.

        You should read the following information together with the "Management's Discussion and Analysis" and Sea Containers' historical consolidated financial statements and the accompanying notes appearing in its Annual Report on Form 10-K for the fiscal year ended December 31, 2003, a copy of which is attached to this prospectus supplement as Appendix A.

S-13

S-14

(1)

The following unaudited pro forma financial information presents the consolidated results of operations of Sea Containers for 2002 as if the consolidation of Silja and the deconsolidation of Orient-Express Hotels had occurred on January 1, 2002, after giving effect to certain adjustments. The unaudited pro forma information is presented for informational purposes only and does not purport to be indicative of the results of operations of Sea Containers had those transactions occurred on January 1, 2002:

For a discussion of the effects of Silja and Orient-Express Hotels on the reported results of Sea Containers in 2002 and 2001, see "Results of Operations (2003 compared to 2002 and 2002 compared to 2001)" in Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report of Sea Containers on Form 10-K for the fiscal year

S-15

ended December 31, 2003, which is attached to this prospectus supplement as Appendix A (the "2003 Form 10-K").

(2)

For a discussion of the effects of the sale of the Isle of Man Stream Packet Company Ltd. on the reported results of Sea Containers in 2003 and 2002, see "Results of Operations (2003 compared to 2002 and 2002 compared to 2001)" in Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2003 Form 10-K, which is attached to this prospectus supplement as Appendix A. See also (1) a pro forma statement of consolidated operations of Sea Containers for the year ended December 31, 2003, reflecting the sale of the Isle of Man Stream Packet Company Ltd. and the application of sale proceeds as if the sale had occurred on January 1, 2002, which statement is filed as Exhibit 99(c) to the 2003 Form 10-K, and (2) note 3 to Sea Containers' consolidated financial statements in the 2003 Form 10-K.

(3)

"Other" comprises gains (losses) on asset sales and earnings from unconsolidated companies (principally GE SeaCo and Orient-Express Hotels) and includes Sea Containers' share of the net earnings of its equity investments as well as interest income related to loans and advances to the equity investees. See notes 1(g) and 4(b) to Sea Containers' consolidated financial statements in the 2003 Form 10-K.

(4)

Interest and related income includes foreign exchange gains of $8,099,000, $7,236,000, $3,454,000, $536,000 and $2,959,000 for the years ended December 31, 2003, 2002, 2001, 2000 and 1999, respectively. In addition, interest and related income in 2002 included a gain of $1,000,000 on redemption of Silja convertible bonds, in 2001 a gain of $2,141,000 on retirement of senior notes and subordinated debentures, and in 2000 a gain of $13,000,000 relating to the sale of a foreign currency swap. Also included are interest on loans to affiliates and interest on receivables related to deferred sales.

(5)

In the first quarter of 1999, Sea Containers adopted AICPA Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities," which requires that all start-up activities be expensed as incurred. The $12,306,000 cumulative effect of this change (after reduction for income taxes of $nil) is included in earnings for the year ended December 31, 1999.

(6)

On January 1, 2002, Sea Containers adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill and other intangibles with indefinite lives should not be amortized, but rather evaluated annually to determine impairment. Intangible assets with finite lives will continue to be amortized using the straight-line method over their estimated useful lives and reviewed for impairment in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Sea Containers determined that as of January 1, 2002 goodwill was not impaired.

In accordance with the transitional disclosure requirements of SFAS No. 142, net earnings would have been adjusted by the addition of goodwill and other intangible asset amortization, net of tax, of $3,100,000 for the years ended December 31, 2001, 2000 and 1999.

(7)

"Earnings" for this ratio consist of earnings before minority interests, income taxes and change in accounting principle, fixed charges and preferred share dividends. "Fixed charges" for this ratio represent interest expensed and capitalized, amortized premiums, discounts and capitalized expenses related to indebtedness, an estimate of the interest within rental expense, and preference security dividend requirements of consolidated subsidiaries. The ratio of earnings to fixed charges will not be materially affected by the issuance of the notes covered by this prospectus supplement.

(8)

"EBITDA" is earnings from operations plus depreciation and amortization. We believe that EBITDA information is commonly reported and widely used by investors and other interested parties because EBITDA is a useful measure for comparing operating performance and debt servicing ability on a consistent basis without regard to depreciation and amortization, which can

S-16

vary significantly depending upon accounting methods (particularly when acquisitions are involved), or nonoperating factors such as historical cost. However, our EBITDA may not be comparable in all instances to EBITDA as disclosed by other companies. You should not consider EBITDA as an alternative to earnings from operations or net earnings (as determined in accordance with generally accepted accounting principles) as a measure of our operating performance, or as an alternative to net cash provided by operating, investing and financing activities (as determined in accordance with generally accepted accounting principles) as a measure of our ability to meet cash needs.

        The following table reconciles Sea Containers' EBITDA to its cash flow from operating activities:

(9)

Long-term debt at December 31, 2002 includes loans relating to Silja as at that date. One hundred percent of Silja's EBITDA has been consolidated from May 1, 2002 only. From May 1, 1999 to May 1, 2002, Silja was accounted for on an equity basis and Sea Containers' 50% share of Silja's net earnings for that period is included in other.

(10)

Excluding the gain on sale of ferry assets ($100,000,000) and non-recurring charges ($46,000,000), EBITDA in 2003 was $265,500,000.

(11)

Excluding the gain on sale of ferry assets and non-recurring charges, the ratio of EBITDA to cash interest expense would have been 2.5x.

(12)

Excluding the gain on sale of ferry assets and non-recurring charges, the ratio of long-term debt to EBITDA would have been 6.0x.

S-17

Risk Factors

        You should carefully consider the risks described below and the other information contained in or incorporated by reference in this prospectus supplement and the accompanying prospectus before making an investment in the notes.

        We have separated the risks into four general groups:

•

risks that relate to Sea Containers' financial condition;



•

risks that relate specifically to owning the notes;



•

risks that relate to Sea Containers' four principal businesses; and



•

other risks.

        We have only described the risks we consider to be the most material. There may be additional risks that we currently deem less material or that are not presently known to us.

        If any of these risks occur, our business, prospects, financial condition, results of operations or cash flows could be materially adversely affected. When we state below that a risk may have a material adverse effect, it means that such risk may have one or more of these effects. In such case, the market price of the notes could decline and our ability to pay interest and principal payments under the notes would be impaired.

        This prospectus supplement and the accompanying prospectus, including the documents incorporated by reference, also contain forward-looking statements that involve risks and uncertainties. We refer you to "Forward-Looking Statements" in this prospectus supplement. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this prospectus supplement and the accompanying prospectus.

Risk Factors Relating to Our Financial Condition

Sea Containers has significant debt repayment obligations in the future, particularly with respect to amounts due in 2006 and thereafter.

        At December 31, 2003, Sea Containers and its subsidiaries were obligated to repay through the end of 2004 approximately $362,537,000 of indebtedness, including $129,038,000 of borrowings under a $198,811,000 revolving credit facility from a syndicate of banks secured by container equipment, due October 24, 2004, and $79,729,000 of 12¹/2% Senior Subordinated Debentures due December 1, 2004.

        In May 2003, management undertook a plan to restructure Sea Containers' indebtedness by extending the maturity dates of certain indebtedness and by repaying other indebtedness by selling or refinancing certain assets. Pursuant to such restructuring plan, through December 31, 2003, Sea Containers and its subsidiaries had repaid or extended the maturity dates of approximately $260,298,000 of indebtedness. Approximately $222,000,000 of the indebtedness repaid came from the proceeds received from the sale of our Isle of Man Steam Packet Company ferry unit in the Irish Sea. In December 2003, Sea Containers entered into a working capital loan facility with a syndicate of banks in the amount of $100,000,000, of which $32,000,000 had been borrowed as of December 31, 2003. Throughout December 2003 and January 2004, Sea Containers issued and sold 2,000,000 class A common shares, realizing net cash proceeds of $35,630,000 used in part to repay short-term debt. Also, Sea Containers filed a registration statement with the Securities and Exchange Commission for a shelf offering of an additional 2,200,000 class A common shares, which registration statement became effective on February 23, 2004.

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        The next steps of the restructuring plan contemplate

•

the extension of the maturity of Sea Containers' revolving credit facility due October 2004,



•

the repayment of the 12¹/2% senior subordinated debentures due 2004 and perhaps other debt with the proceeds of the sale of the notes being offered in this prospectus supplement,



•

the sale of additional newly issued class A common shares of Sea Containers, and



•

the sale of the common shares of Orient-Express Hotels owned by Sea Containers.

The sale of Sea Containers or Orient-Express Hotels shares will depend on market conditions. We cannot assure you that Sea Containers will be able to complete its restructuring plan on a timely basis or that Sea Containers will raise funds or extend maturities to the extent necessary.

        To the extent that indebtedness is refinanced or its maturity successfully extended, Sea Containers will have to repay the new or extended indebtedness when it becomes due, together with other indebtedness due in future years, and we cannot assure you that Sea Containers will have sufficient cash flow from operations to do so. Furthermore, although Sea Containers may seek to refinance some of its indebtedness in future years, it may not be able to obtain refinancing. Sea Containers has substantial additional indebtedness due in the future, particularly in 2006 and thereafter. As of December 31, 2003, Sea Containers and its subsidiaries had $138,413,000 of indebtedness due in 2005, $276,511,000 due in 2006, $146,032,000 due in 2007 and $667,930,000 due in 2008 and thereafter. Sea Containers may also incur additional indebtedness in the future.

        Any failure of Sea Containers to repay any indebtedness when due may result in a default under such indebtedness and cause cross-defaults under other indebtedness.

Sea Containers' substantial indebtedness could adversely affect its financial health.

        Sea Containers and its subsidiaries have a significant amount of debt and may incur additional debt from time to time. As of December 31, 2003, Sea Containers' consolidated long-term indebtedness was $1,593,658,000. Also, GE SeaCo, our 50/50 joint venture with General Electric Capital Corporation, which is not consolidated for accounting purposes with Sea Containers, had $510,552,000 of long-term indebtedness at December 31, 2003.

        This substantial indebtedness could

•

require Sea Containers to dedicate a large portion of its cash flow from operations to payments on its indebtedness and the indebtedness of its subsidiaries, and so reduce the availability of cash flow to fund its working capital, capital expenditures, product and service development and other general corporate purposes. For example, in 2003, Sea Containers and its subsidiaries generated $98,424,000 in cash from operating activities after paying interest of $104,477,000 and before loan principal repayments of $123,670,000,



•

limit Sea Containers' ability to obtain additional financing to fund future working capital, capital expenditures, product and service development and other general corporate purposes,



•

increase its vulnerability to adverse economic and industry conditions, including the seasonality of some of its businesses, or



•

limit its flexibility in planning for, or reacting to, changes in its business and industry as well as the economy generally.

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Covenants in Sea Containers' financing agreements could limit its discretion in operating its businesses, causing Sea Containers to make less advantageous business decisions. A substantial portion of Sea Containers' indebtedness is secured by its assets.

        Our financing agreements with about 50 commercial bank lenders contain covenants that include limits on additional debt secured by mortgaged properties, limits on liens on property and limits on mergers and asset sales, and financial covenants requiring maintenance of a minimum net worth amount or a minimum interest expense coverage, or establishing a maximum debt-to-equity ratio. Also, a substantial portion of Sea Containers' indebtedness is secured by its assets. Future financing agreements may contain similar, or even more restrictive, provisions and covenants. If Sea Containers fails to comply with the restrictions in its present or future financing agreements, a default may occur. A default could allow the creditors to accelerate the related debt as well as any other debt to which a cross-acceleration or cross-default provision applies. A default could also allow the creditors to foreclose on the assets securing such debt.

Increases in prevailing interest rates may increase our interest payment obligations.

        About 72% of Sea Containers' consolidated long-term debt at December 31, 2003, accrued interest at rates that fluctuate with prevailing interest rates, so that any increases in prevailing interest rates may increase our interest payment obligations. From time to time, Sea Containers enters into hedging transactions in order to manage its floating interest-rate exposure. At December 31, 2003, Sea Containers had swapped $177,430,000 of floating rate debt for fixed rate debt.

Sea Containers will need additional capital to finance the growth of its business.

        Our acquisition of new assets and properties, both for growth as well as for replacement, is capital intensive. The availability of future borrowings and access to the capital markets to finance these acquisitions depends on Sea Containers' ability to incur additional debt under its current financing agreements, on prevailing market conditions and on the acceptability of financing terms offered to Sea Containers. We cannot assure you that future borrowings or security offerings will be available, or available on attractive terms, to Sea Containers in an amount sufficient to enable it to fund its needs.

Risk Factors Relating to Your Ownership of the Notes

Sea Containers may depend on payments from its subsidiaries to service its debt.

        Sea Containers conducts a substantial portion of its business through subsidiaries, which generate a substantial portion of Sea Containers' revenue and cash flow. Sea Containers, therefore, may depend upon payments, dividends and distributions from its operating subsidiaries for funds to pay principal and interest on the notes.

        The indenture for the notes being offered in this prospectus supplement provides that Sea Containers will not, and will not permit any of its material subsidiaries to, create or allow any restriction on their ability to pay dividends to Sea Containers. However, the indenture also provides that any material subsidiary acquired by Sea Containers after the date of the indenture may be subject to such restrictions so long as the restrictions were in place before the date of acquisition. Sea Containers may also permit such restrictions in any agreement refinancing, renewing or replacing those agreements. See "Description of the Notes—Covenants—Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries."

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Your right to receive payments under the notes effectively will be junior to the rights of Sea Containers' secured creditors and all creditors of subsidiaries of Sea Containers.

        The notes are unsecured. A significant portion of Sea Containers' debt is secured by its assets. As a result, the holders of Sea Containers' secured debt will have a claim to those assets which is prior to any claim which you may have to those assets, so that the notes will be effectively subordinated to that secured indebtedness. At December 31, 2003, Sea Containers had approximately $237,476,000 aggregate principal amount of secured debt.

        Also, the notes are not guaranteed by any of Sea Containers' subsidiaries and as a result will also be effectively subordinated to all indebtedness and other liabilities of these subsidiaries, which at December 31, 2003, amounted to about $970,074,000.

        Sea Containers and its subsidiaries will have the ability to incur additional indebtedness from time to time, including secured indebtedness.

        See "Description of the Notes—Ranking."

If the notes ever achieve investment grade ratings, and whether or not they maintain these ratings, Sea Containers will no longer need to comply with most of the restrictive covenants under the indenture.

        The indenture for Sea Containers' notes provides that Sea Containers' obligation to comply with most of its restrictive covenants will terminate if the notes receive investment grade ratings from Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, and Moody's Investors Service, Inc. These covenants will remain terminated even if the notes later lose their investment grade ratings. As a consequence, holders of notes will not regain the protection of these covenants if they ever should terminate. We cannot assure you that if the notes are rated investment grade, they will not be subsequently downgraded by the ratings agencies. See "Description of the Notes—Covenants."

Sea Containers cannot assure you that if a change of control of Sea Containers were to occur, Sea Containers would be able to raise sufficient funds to purchase all the notes as required by the indenture.

        The indenture requires Sea Containers to make an offer to purchase the notes if a change of control of Sea Containers should occur. However, we cannot assure you that if a change of control of Sea Containers were to occur, Sea Containers would have access to sufficient funds to pay the change of control purchase price of all notes.

        The holders of much of Sea Containers' other debt have a similar change of control right, which could require Sea Containers to make offers to purchase their debt in the event of a change of control. As a result, even if Sea Containers had the funds to repurchase the notes, it may not have sufficient funds to satisfy its other change of control obligations, which could result in a default under the other indebtedness. Sea Containers might need to seek third-party financing to the extent it does not have available funds to meet those purchase obligations. However, Sea Containers does not know whether or not it would be able to obtain that financing.

        Additionally, covenants in Sea Containers' borrowing agreements may limit or prohibit the purchase of the notes by Sea Containers. See "Description of the Notes—Purchase of Notes upon Change of Control."

You may not be able to resell your notes because of the lack of an established public market for the notes.

        Although Sea Containers intends to list the notes on the New York Stock Exchange, an active trading market for the notes may not develop. In addition, the liquidity of any trading market in the notes, and any market price quoted for the notes, may be adversely affected by the changes in the overall market for high yield securities and by changes in our financial performance or prospects or in

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the prospects for companies in Sea Containers' businesses generally. As a result, you may be unable to resell your notes.

        Sea Containers cannot assure you that the trading market for the notes, if any, will be liquid. To the extent that there is not sufficient liquidity in any trading market, the market price of the notes may be adversely affected and may be more volatile than it would be if liquidity existed.

Under Bermuda insolvency laws, the rights of noteholders as unsecured creditors of Sea Containers would likely be more limited than under United States federal bankruptcy law.

        Because Sea Containers is incorporated under the laws of Bermuda, an insolvency proceeding relating to Sea Containers, even if brought in the United States, might involve Bermuda insolvency laws, the procedural and substantive provisions of which are generally more favorable to secured creditors than comparable provisions of United States federal bankruptcy law. Under Bermuda insolvency laws, the claims of unsecured creditors are payable only to the extent that assets remain available and can be sold after the assets subject to the claims of secured creditors are sold and the proceeds applied to pay those secured creditor claims. Also, it would be difficult to rehabilitate and reinstate as a going concern a company which becomes the subject of an insolvency proceeding conducted in Bermuda.

Risk Factors Relating to our Businesses

Ferry Operations

The ferry industry in areas where Sea Containers operates is highly competitive.

        Sea Containers competes with

•

six conventional ferry companies between southern Britain and the European Continent, three of which cross the Dover Straits, and also with Eurotunnel under the English Channel,



•

five ferry operators between Britain and Ireland, including three running fast ferries,



•

airlines, which compete for passenger traffic on our U.K. routes and longer routes,



•

another commuter ferry service from eastern New Jersey to Manhattan, as well as road and rail commuter services, and



•

eight ferry companies in the northern Baltic Sea.

        The principal effect of all this competition is to limit our pricing power on our various routes. An increase in competition on any of the routes could adversely affect Sea Containers' passenger traffic or its pricing, thereby reducing its revenues. Also, some of Sea Containers' competitors have lower labor costs than it does, giving them an operating cost advantage over Sea Containers.

Sea Containers no longer offers duty-free sales to most of its passengers traveling between European Union countries, and retail profitability has fallen as a result.

        Retail sales to passengers of wine, spirits, perfume, tobacco and other products are an important component of ferry revenue on many of our routes. Duty-free shopping by passengers travelling between European Union countries ended in 1999, and the profitability of affected routes has fallen because margins are less on duty-paid merchandise. Also, passenger and car volumes have declined, particularly on our cross-Channel routes, below 1999 levels because of the absence of duty-free shopping and because fares have been increased to try to maintain profitability. Silja has been less affected by the abolition of duty-free retail sales because all of its sailings to and from Sweden call at the nearby Åland Islands of Finland where the duty-free exemption continues due to the islands' fiscal status outside the European Union. However, we cannot assure you that the Åland Islands will continue to maintain its duty-free exemption. Also, Silja's routes to Russia remain duty-free as well as those to Estonia until May 2004 when Estonia joins the European Union.

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Sea Containers' operating results are subject to seasonal fluctuations.

        Our passenger ferry business in North Europe and within the Baltic Sea is subject to seasonal fluctuation principally because volumes are linked to tourism. For example, about one-half of the passengers using ferry services to and from Britain travel during the June-September period. The historical and expected pattern of operating results from our ferry activities collectively is a loss in the first quarter each year and either a loss or breakeven result in the fourth quarter. In 2004, we plan to operate our remaining U.K. ferry services on a seasonal basis, closing during the winter months, to save costs.

Rising fuel prices may adversely affect the profits of Sea Containers' ferry services.

        Fuel is a significant operating expense for ferry operations. As a result, an increase in the price of fuel, such as that which occurred late in 2002 and has continued to the present, has adversely affected, and may in the future adversely affect, profitability. Sea Containers may purchase fuel forward at predetermined prices, as it did for part of 2003, and may introduce fuel surcharges on passenger and vehicle fares in an effort to mitigate these increased costs, but we cannot assure you that these measures will prevent a fall in profits.

        Also, fuel price protests, as occurred in 2000 at French and British ports served by our ferries, may disrupt traffic flow for short periods and result in cancellations. Road and port blockades in the future, arising from fuel protests or other reasons, such as third party strike activity, may have similar effects resulting in loss of carryings.

Recurrence of the foot and mouth epidemic or other events affecting tourism in Britain may adversely affect Sea Containers' results.

        In 2001, parts of mainland Britain suffered a foot and mouth disease outbreak. Areas were quarantined and affected livestock was killed. As a result, tourism in Britain suffered because of the negative publicity and cancellations of annual sporting and other public events during the spring and summer. Our ferry services to and from the European continent and Ireland were adversely affected because tourist passenger and car traffic fell. The epidemic ended in the latter part of 2001, but it may recur in the future. Generally speaking, our ferry traffic fluctuates with levels of tourism to Britain and may decline if events affecting tourism should occur, like the foot and mouth epidemic or acts or threatened acts of terrorism.

Accidents at sea and compliance with safety and environmental requirements may adversely affect Sea Containers' ferry operations.

        The operation of ships at sea is inherently risky, and the consequences of accidents may exceed the insurance coverage in place or result in a fall in passenger volume because of a possible adverse impact on the public's perception of ferry safety. For example, in August 2002, an engine fire in a ferry on Sea Containers' Belfast to Heysham route disrupted service during the peak season, resulting in a loss of about $3,500,000 of revenue which was not covered by insurance. Also, government regulation of ships, particularly in the areas of safety and environmental impact, may change in the future and require us to incur significant capital expenditure on our ships to keep them in compliance.

Silja employs about 3,500 staff on board ship and onshore, most of whom are unionized. Strikes by them may disrupt Silja services.

        The shipping industry in Finland and Sweden is susceptible to industrial action due to the strong influence of maritime trade unions, resulting both from direct employer/employee disputes and from sympathetic industrial action which legislation in those countries currently permits. While we believe that Silja has good relations with its work force, we cannot assure you that Silja will not be adversely

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affected by future industrial action against efforts by Silja management to reduce labor costs, restrain wage increases or modify work practices.

Profit margins on duty-free alcohol sold by Silja may decline in the future.

        Retail prices of alcoholic beverages in the state monopoly shops in Finland and Sweden are very high compared to the retail prices in other European Union countries. We expect that the import of lower cost duty-paid alcoholic beverages bought by private individuals in other European Union countries will gradually result in a reduction of prices in Finland and Sweden. Lower retail prices in the shops on land will require duty-free shops on board Silja ferries to lower their prices to maintain their competitive advantage and therefore will likely lead to lower profit margins. This could have an adverse effect on Silja's financial results because a large part of Silja's revenue is generated by sales made in shops on board, about half of which is attributable to liquor, wine and beer.

Other factors may adversely affect the profitability of Sea Containers' ferry services.

        Other principal factors affecting the performance of our ferry services are

•

travel convenience of departure timings,



•

adverse weather conditions disrupting service schedules,



•

regional economic and political conditions, including recessions or acts or threatened acts of terrorism,



•

foreign exchange rate fluctuations in countries served by our ferries,



•

fluctuating prices in the ship sale and purchase market, and



•

industrial relations, strike activity and civil unrest at the ports and regions served by our ferries.

        The impact on profitability of these factors varies with each route and may change from year to year. Also, the opening of new routes can be unprofitable in early years because of the need to build up traffic over time while incurring added marketing, administrative and other start-up costs.

Rail Operations

Great North Eastern Railway's rail franchise expires in April 2005 and may not be extended.

        GNER's rail franchise was originally granted by the predecessor of the U.K. Strategic Rail Authority in 1996 for a seven-year term, and was extended by two years so that it currently expires in April 2005. On January 29, 2004, the Authority announced it would invite bids from all interested persons to operate the franchise for a new term of seven to ten years after it expires in April 2005, and GNER plans to bid to renew the franchise. However, we cannot assure you that GNER will be awarded the franchise or that the currently pending dispute with the Authority may not affect its willingness to continue GNER as the franchisee. Failure to renew or extend the franchise in 2005 could require Sea Containers to terminate its rail operations, unless Sea Containers is awarded another passenger franchise, and could adversely affect Sea Containers' future earnings. Sea Containers' earnings before interest and tax from rail operations were $68,893,000 in 2002 and $84,083,000 in 2003. Any residual assets of GNER at the end of the franchise would be transferred to the successor franchisee, if not GNER, at a value which may give rise to a gain or loss at that time. If Sea Containers is able to renew the franchise in 2005 as planned, the renewal terms may be less attractive to GNER than its current franchise and earnings before interest and tax from rail operations could be reduced by about $25,000,000 annually based on current forecasts. GNER earnings are subject to corporate income tax in the U.K.

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The failure by Network Rail to maintain properly the railway infrastructure may disrupt GNER's passenger rail services in Britain and may adversely affect GNER's revenues.

        As part of the privatization of the rail industry in Britain, Network Rail (Infrastructure) Ltd. (the successor to Railtrack Plc since October 2002) owns and maintains almost all track, signaling and other rail infrastructure in Britain. We have contracted with Network Rail for access to the tracks on which we operate. Our services may be disrupted and we may lose revenue if Network Rail fails to maintain track and signaling sufficiently. Although Network Rail has agreed to compensate us for certain disruptions and losses, we cannot assure you that we will be fully compensated.

        On October 17, 2000, a GNER train traveling at high speed derailed because of broken track near the town of Hatfield north of London. Four passengers were killed and 70 more were injured. The track had been insufficiently maintained by Railtrack with no speed restriction in place. GNER was exonerated from any responsibility for the accident.

        On February 28, 2001, another accident involving GNER occurred near the town of Selby, south of York, when a passenger vehicle ran off a highway and stopped in the path of an oncoming GNER train traveling at high speed. The collision with the vehicle and the resulting derailment thrust the GNER train into a laden coal train traveling in the opposite direction on the adjacent track. In the collision between the two trains, ten persons were killed including three GNER staff, and 70 more were injured. As in the Hatfield derailment, GNER has been absolved from any fault for the Selby accident.

        Following the Hatfield derailment, Railtrack imposed speed restrictions on the British rail network for many months while track inspections and emergency maintenance were carried out. Train service was severely disrupted from resulting delays and cancellations. Most GNER services have been reinstated to pre-Hatfield levels, but following the Hatfield and Selby accidents and until 2003, long distance train operators in Britain generally, including GNER, had experienced a fall in ridership or at least a slowdown in ridership growth.

GNER does not maintain business interruption insurance relating to its moving train operations.

        Following the Hatfield and Selby accidents described above, as well as accidents involving other passenger train operators in Britain and the bankruptcy of one of the larger insurers writing business interruption insurance for the U.K. rail industry, this class of coverage is not currently available to passenger rail franchisees in the U.K. GNER and other franchisees are relying primarily on their rights against Network Rail under track access agreements for reimbursement of losses from future accidents involving moving train operations. There can be no assurance, however, that Network Rail or other responsible parties will provide sufficient reimbursement to make GNER whole.

Following settlement of GNER's disputes with Network Rail, GNER has a separate dispute with the U.K. Strategic Rail Authority.

        Following the Hatfield and Selby accidents described above, GNER made claims against Railtrack under the track access agreement including for lost revenues attributable to the disruption in services resulting from these accidents. Because of disputes, both GNER and Railtrack withheld contractual payments due during 2001 through March 2002, when payments resumed. As a result of separate arbitration awards under different parts of the track access agreement, Railtrack's liability to compensate GNER was confirmed and proceedings continued as to the amounts due. In December 2003, GNER and Network Rail (as Railtrack's successor) reached an agreement settling GNER's claims arising from the service disruption and relieving GNER from the obligation to repay amounts previously withheld, other than £4,500,000 ($7,900,000) of track access charges over withheld.

        The U.K. Strategic Rail Authority, the franchisor under GNER's passenger rail franchise agreement, has separately claimed a portion of the compensation received by GNER in its settlement with Network Rail. The Authority's claim amounts to about £25,000,000 ($45,000,000). GNER was

S-25

advised by its legal counsel that GNER has no obligation to the Authority under its franchise agreement. On or about January 28, 2004, the Authority provided GNER with an opinion of its legal counsel concluding that the Authority is entitled to payment. GNER furnished its counsel with a copy of the opinion of the Authority's counsel and, on February 11, 2004, GNER received a second opinion from its legal counsel stating that, after reviewing the opinion of the Authority's legal counsel, GNER's counsel maintained the view that GNER is not obligated to pay over to the Authority any portion of the settlement compensation received by GNER from Network Rail.

        GNER and the Authority are currently engaged in discussions to resolve this dispute. If the parties do not reach agreement, the dispute between GNER and the Authority would be submitted to arbitration. We cannot assure you that the discussions between GNER and the Authority will be successful or that GNER will not have to make payments to the Authority as a result of an arbitration proceeding or otherwise. Sea Containers has recorded a liability in its 2003 financial statements for this dispute.

Our GNER rail business competes with other passenger train operators in Britain that may increase their train paths and times and limit our expansion plans.

        Eight other passenger train operators in Britain run on parts of GNER's routes. In general, another operator may negotiate with Network Rail for new services and additional train paths and times. All awards are still government-regulated to ensure passenger benefits are achieved, such as better frequencies, lower fares or new journey opportunities, and to avoid competition that might interfere with each operator's ability to satisfy the minimum service requirements under its franchise. GNER has experienced only limited new competition since its franchise began. Aggressive bidding by GNER's rail competitors in the future, however, may divert business away from GNER and limit our expansion plans.

        We also compete with cars, buses, airlines and other train operators with parallel or intersecting train routes with us. Customers tend to choose their mode of transportation based on

•

frequency of arrivals and departures,



•

time,



•

reliability,



•

convenience,



•

comfort, and



•

price.

        The weight given to any one particular factor depends on whether a customer is traveling for business or for pleasure.

GNER may be unable to increase its revenue to pass through its increased expenses.

        We offer a variety of ticket types with different prices, such as standard class, first class, weekend and advance purchase. We are contractually obligated not to raise our ticket prices more than one percent above the rate of inflation on ticket types currently representing about 20% of GNER's fare revenues. Our remaining ticket prices are not subject to any cap but are subject to competitive pricing of alternative rail, airline and other transport services. We must also pay passenger rebates if our trains fail to meet prescribed punctuality and reliability standards. Therefore, if our expenses increase, we may be unable to raise our revenue to pass through these increases.

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We cannot assure you that labor disputes at GNER or other rail services will not adversely affect Sea Containers.

        Labor is the largest component of variable costs for our rail operation. GNER has about 3,200 employees, about two-thirds of whom belong to unions. Since 1992, there has not been a labor strike specifically directed at GNER although nationwide strikes against former British Rail disrupted GNER's rail services for short periods in 1994 and 1995. The management of our rail operations is working with the unions to increase efficiency by changing work practices, mutual decision making and ongoing training, without adversely impacting service or safety. We cannot assure you that these measures will not result in labor disputes disrupting our business or that nationwide strikes similar to those discussed above will not recur. Also, labor disputes disrupting other rail services connecting with GNER may reduce our passenger carryings so that we lose revenue.

Penalty payments, poor weather, rising compliance costs and accidents may adversely affect GNER performance.

        If our train services disrupt Network Rail's scheduling or other operation of the rail infrastructure, such as by breakdowns of our rolling stock or through strikes by our employees, or if our services become insufficiently reliable, then GNER must pay contractual penalties to Network Rail or the British government. Our penalty payments have varied in the past but could be substantial since some factors that cause delays can be largely out of our control.

        Other factors affecting GNER's financial performance are adverse weather conditions disrupting services such as by track flooding, actual or threatened terrorist acts halting services, and changing government safety regulations which impose additional compliance costs on train operators. While we believe GNER operates its trains in compliance with relevant safety standards and carries adequate insurance against loss, we cannot assure you that accidents will not occur in the future involving GNER, whether or not it is at fault, or involving other train operations in Britain, or that a serious incident, whether or not involving GNER, would not have a material adverse effect on GNER's operations or financial condition.

Marine Container Leasing

        The risk factors set forth below may affect the marine container leasing businesses of both the GE SeaCo joint venture and Sea Containers by itself.

GE SeaCo and Sea Containers may be unable to compete favorably in the highly competitive container leasing and sales business.

        The container leasing and sales business is highly competitive. GE SeaCo and we compete with

•

nine other major leasing companies,



•

many smaller lessors,



•

manufacturers of container equipment,



•

companies offering finance leases as distinct from operating leases,



•

promoters of container ownership and leasing as a tax shelter investment,



•

container shipping lines, which sometimes lease their excess container inventories, and



•

suppliers of alternative types of equipment for freight transport.

Competition among container leasing companies depends upon factors which include

•

lease rates,



•

the availability, quality and individual characteristics of equipment, and



•

customer service.

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A decrease in the volume of world trade and other operating factors may adversely affect Sea Containers' container leasing business.

        World Trade.    Demand for leased containers depends largely on levels of international trade and economic growth, both global and regional. Cyclical recessions can negatively affect lessors' operating results because during economic downturns or periods of reduced trade, such as occurred in 2001, ocean carriers may lease fewer containers and rely more on their owned fleets to satisfy their container requirements or may lease containers only at reduced rates. Thus, a slowdown in economic growth or trade may adversely affect GE SeaCo's container leasing business. We cannot predict whether or when such cyclical downturns will occur in the leasing industry.

        Other Factors.    In recent years, the availability of low prices for new containers, principally those manufactured in China, and the consolidation of shipping lines have adversely affected our container leasing business. These trends may continue.

        Other general factors affecting demand for leased containers include

•

the available supply and prices of new and used containers, including the market acceptance of new container types and overbuying by competitors and customers,



•

economic conditions and competitive pressures in the shipping industry, including fluctuating ship charter and freight rates, containership fleet overcapacity or undercapacity, and expansion, consolidation or withdrawal of individual customers in that industry,



•

shifting trends and patterns of cargo traffic,



•

the availability and terms of equipment financing,



•

fluctuations in interest rates and foreign currency values,



•

import/export tariffs and restrictions,



•

foreign exchange controls, and



•

other governmental regulations and political or economic factors that are inherently unpredictable and may be beyond our control.

        The effect of these factors in 2002 was a decline in container leasing profitability.

We cannot assure you that lease rates or utilization for our containers will not decrease or that we can meet container demand.

        GE SeaCo's revenue is variable and largely depends on lease rates, equipment utilization and equipment availability. Lease rates depend on

•

the type and length of the lease,



•

the type and age of the equipment,



•

the application of our SeaWorthy and SeaCover programs to equipment maintenance obligations under the lease,



•

competition, as more fully discussed above,



•

interest rates,



•

new container prices, and



•

economic conditions, including world trade and other factors more fully discussed above.

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        In recent years lease rates have declined, as have new container prices, and may continue to do so, thereby detracting from the economic returns on higher valued existing equipment.

        Utilization is the ratio of containers on lease to GE SeaCo's total container fleet and may also fluctuate due to these same factors. In recent years, for example, overall fleet utilization has declined principally because of consolidations among shipping lines, a trade imbalance with Asia resulting in high equipment returns in North America and Europe, and overproduction of some types of new containers by factories and overbuying by shipping lines and leasing competitors. While utilization improved in 2002 and 2003, there may again be a decline in utilization in future years.

        In order to meet anticipated demand promptly, GE SeaCo maintains inventories of available containers at various depots worldwide. Because demand is difficult to estimate, however, these inventories may be too large or small, and repositioning equipment in a timely manner may not be economically feasible. Also, container supply from manufacturers involves a time delay between order placement and equipment delivery, as a result of which GE SeaCo's revenue may be restrained when demand is strong or may not be realized by the time equipment is delivered.

If GE SeaCo sells large quantities of equipment, our gains or losses on sale of equipment will fluctuate and may be significant.

        From time to time GE SeaCo sells equipment which it or one of its partners owns, both containers on lease to the lessee and idle equipment off lease. Equipment is typically sold if it is in the best interest of the owner to do so after taking into consideration the book value, physical condition, remaining useful life, suitability for leasing or other uses, and the prevailing local sales price for the equipment. Since these considerations vary, gains or losses on sale of equipment will also fluctuate and may be significant if GE SeaCo sells large quantities of equipment. In recent years, GE SeaCo has stepped up its sale program on behalf of its partners to dispose of older units.

Repositioning costs may adversely affect our profitability.

        If lessees return equipment to locations where supply exceeds demand, GE SeaCo routinely repositions containers to higher demand areas. Repositioning expenses vary depending on geographic location, distance, freight rates and other factors, and may not be fully covered by drop-off charges collected from the last lessees of the equipment or pick-up charges paid by the new lessees. Nor may demand be as great as anticipated after repositioning has occurred so that the equipment remains idle.

Sea Containers may lose lease revenue and incur additional operating expenses when lessees of its containers default.

        When lessees of our containers default, the containers may be returned in locations where GE SeaCo cannot efficiently re-lease or sell them, or they may be lost. GE SeaCo may have to repair and reposition these containers where it can re-lease or sell them, which could be expensive depending on the locations and distances involved. As a result, GE SeaCo may lose lease revenue and incur additional operating expenses in repossessing and storing the equipment. While in recent years, defaults by lessees, as measured by our allowance for specific doubtful accounts, have not been material as a percentage of container revenue, we cannot assure you that any future defaults will not be material.

Sea Containers may be subject to environmental liability that could adversely affect its business and financial health despite its insurance coverage.

        In certain countries like the United States, the owner of a leased container may be liable for the costs of environmental damage from the discharge of the contents of the container even though the lessor is not at fault. GE SeaCo maintains insurance against property damage and third-party liability for its owned containers and those of its partners, and we require lessees to obtain similar insurance

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and to provide us indemnity against loss. However, we cannot assure you that insurance or indemnities can fully protect us or GE SeaCo against damages arising from environmental damage.

        Many countries impose limitations on the production of chlorofluorocarbon CFC refrigerants because of their ozone depleting and global warming effects. As a result, substantially all refrigerated containers in the GE SeaCo fleet acquired since 1992 have been charged with non-CFC refrigerant gas, and we are converting older units over time to non-CFC gas or disposing of them. Future government regulation of refrigerants and synthetic insulation materials, however, might require refrigerated containers using non-conforming substances to be retrofitted with conforming ones such as non-CFC refrigerants. In that event, we would have to bear all or a large portion of the cost to convert our units.

Leisure Investment

The operations of Orient-Express Hotels are subject to adverse factors generally encountered in the hospitality industry.

        Besides the specific conditions discussed in the risk factors below, these factors include

•

cyclical downturns arising from changes in general and local economic conditions,



•

rising or falling disposable income of consumers and the traveling public,



•

dependence on varying levels of tourism, business travel and corporate entertainment,



•

changes in popular travel patterns,



•

competition from other hotels and leisure time activities,



•

periodic local oversupply of guest accommodation, which may adversely affect occupancy rates and actual room rates achieved,



•

increases in operating costs due to inflation and other factors which may not be offset by increased revenues,



•

regional and local economic and political conditions affecting market demand, including recessions, civil disorder and acts of terrorism,



•

foreign exchange rate movements,



•

adverse weather conditions or destructive forces like fire or flooding, and



•

seasonality, in that many of Orient-Express Hotels' hotels and tourist trains are located in the northern hemisphere where they operate at low revenue or close during the winter months.

        The effect of these factors varies among Orient-Express Hotels' hotels and other properties because of their geographic diversity. The SARS epidemic in Asia, for example, caused a reduction in passenger bookings on the tourist train of Orient-Express Hotels operating between Bangkok and Singapore and had a negative impact on travel to Australia and Tahiti. Although the SARS outbreak has been contained, it is possible that the disease could re-emerge. The occurrence of this or a similar event may have a negative impact on Orient-Express Hotels' operations.

        In particular, as a result of terrorist attacks in the United States on September 11, 2001 and the subsequent military actions in Afghanistan and Iraq, international, regional and even domestic travel has been disrupted. Demand for most of Orient-Express Hotels' properties declined substantially in the latter part of 2001, and the effects of the disruption are continuing to be felt. For example, American leisure travelers seem more reluctant than in the past to go abroad, and the booking lead-times by guests, travel agents and tour operators at Orient-Express Hotels' properties has shortened since September 11. Further acts of terrorism or possible military action could again reduce leisure and business travel.

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The hospitality industry is highly competitive, both for acquisitions of new hotels and restaurants and for customers.

        Orient-Express Hotels competes for hotel and restaurant acquisition opportunities with others who have substantially greater financial resources than it does. They may be prepared to accept a higher level of financial risk than Orient-Express Hotels can prudently manage. This competition may have the effect of reducing the number of suitable investment opportunities offered to Orient-Express Hotels and increasing Orient-Express Hotels' acquisition costs by enhancing the bargaining power of property owners seeking to sell or to enter into management agreements.

        Some of Orient-Express Hotels' properties are located in areas where there are numerous competitors. For example, in the last two years, competing deluxe hotels opened near its properties in New Orleans, Sydney and Rio de Janeiro. Competitive factors in the hospitality industry include convenience of location, quality of the property, room rates and menu prices, range and quality of food services and amenities offered, types of cuisine, and name recognition. Demographic, geographic or other changes in one or more of Orient-Express Hotels' markets could impact the convenience or desirability of its hotels and restaurants, and so could adversely affect their operations. Also, new or existing competitors could significantly lower rates or offer greater conveniences, services or amenities or significantly expand, improve or introduce new facilities in the markets in which Orient-Express Hotels' hotels and restaurants compete.

The hospitality industry is heavily regulated, including with respect to food and beverage sales, employee relations, construction and environmental concerns, and compliance with these laws could reduce revenues and profits of properties owned or managed by Orient-Express Hotels.

        Orient-Express Hotels and its various properties are subject worldwide to numerous laws, including those relating to the preparation and sale of food and beverages, liquor service, and health and safety of premises. Orient-Express Hotels' properties are also subject to laws governing Orient-Express Hotels' relationship with its employees in such areas as minimum wage and maximum working hours, overtime, working conditions, hiring and firing employees and work permits. Also, the success of expanding Orient-Express Hotels' existing properties depends upon its obtaining necessary building permits or zoning variances from local authorities.

        Orient-Express Hotels also is subject to foreign and U.S. laws and regulations relating to the environment and the handling of hazardous substances which may impose or create significant potential environmental liabilities, even in situations where the environmental problem or violation occurred on a property before Orient-Express Hotels acquired it.

Orient-Express Hotels' acquisition, expansion and development strategy may be less successful than we expect, and, therefore, its growth may be limited.

        Orient-Express Hotels intends to increase its revenue and net income through acquisitions of new properties and expansion of its existing properties. Pursuit of new growth opportunities successfully will depend on the ability to identify properties suitable for acquisition and expansion, to negotiate purchases or construction on satisfactory terms, to obtain the necessary financing and permits and to integrate new properties into existing operations. Also, the acquisition of properties in new locations may present operating and marketing challenges that are different from those currently encountered in existing locations. We cannot assure you that Orient-Express Hotels will succeed in its growth strategy.

        Orient-Express Hotels may develop new properties in the future. New project development is subject to such adverse factors as market or site deterioration after acquisition, inclement weather, labor or material shortages, work stoppages and the continued availability of construction and permanent financing. For example, the opening of the Westcliff Hotel in Johannesburg occurred about

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six months later than originally planned as construction took longer than expected. This delay had a significant adverse impact on the revenue and profitability of African operations.

We cannot be sure that Orient-Express Hotels will obtain the necessary additional capital to finance the growth of its business.

        The acquisition and expansion of leisure properties, as well as the ongoing renovations, refurbishments and improvements required to maintain or upgrade existing properties, are capital intensive. Orient-Express Hotels' current expansion plans call for the expenditure of up to an aggregate of about $90,000,000 over the next few years to add new rooms and/or facilities to existing properties, and its current acquisition plans call for the expenditure of about $50,000,000 per year for new properties. The availability of future borrowings and access to the capital markets for equity financing to fund these acquisitions and expansions depends on prevailing market conditions and the acceptability of financing terms offered to Orient-Express Hotels. We cannot assure you that future borrowings or equity financing will be available to Orient-Express Hotels, or available on acceptable terms, in an amount sufficient to fund its needs. Future debt financings could involve restrictive covenants which would limit Orient-Express Hotels' flexibility in operating its business.

Orient-Express Hotels' operations may be adversely affected by extreme weather conditions and the impact of natural disasters.

        Orient-Express Hotels operates properties in a variety of locales, each of which is subject to local weather patterns and their effects on its properties as well as on customer travel. Since Orient-Express Hotels' revenues are dependent on the revenues of individual properties, extreme weather conditions can from time to time have a major adverse impact upon individual properties or particular regions. For example, in November 1999 a major hurricane passed over St. Martin where the La Samanna hotel is located, resulting in the closing of the hotel until February 2000 so that much of the high season that year was missed.

        Orient-Express Hotels' properties are also vulnerable to the effects of destructive forces, such as fire, storms and flooding. Although the properties are insured against property damage, damages resulting from acts of God or otherwise may exceed the limits of the insurance coverage or be outside the scope of that coverage. The La Samanna hotel, for example, suffered substantial wind and flooding damage during the 1999 hurricane. Although it was fully insured for that damage, Orient-Express Hotels may face losses with other natural disasters affecting its properties in the future.

If the relationships between Orient-Express Hotels and its employees were to deteriorate, it may be faced with labor shortages or stoppages, which would adversely affect its ability to operate its facilities.

        Orient-Express Hotels' relations with its employees in various countries, including employees represented by labor unions, could deteriorate due to disputes related to, among other things, wage or benefit levels, working conditions, or its response to changes in government regulation of workers and the workplace. Operations rely heavily on employees' providing high-quality personal service, and any labor shortage or stoppage caused by poor relations with employees, including labor unions, could adversely affect the ability to provide those services, which could reduce occupancy and room revenue and even tarnish Orient-Express Hotels' reputation.

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Orient-Express Hotels' owned hotels and restaurants are subject to risks generally incident to the ownership of commercial real estate and often beyond its control.

        These include

•

changes in national, regional and local economic and political conditions,



•

changes in interest rates and in the availability, cost and terms of financing,



•

the impact of present or future governmental legislation and regulations (including environmental laws),



•

the ongoing need for capital improvements to maintain or upgrade properties,



•

changes in property taxes and operating expenses, and



•

the potential for uninsured or underinsured losses.

Sea Containers no longer has voting control of Orient-Express Hotels which is no longer a Sea Containers consolidated subsidiary.

        On July 22, 2002, a subsidiary of Orient-Express Hotels—Orient-Express Holdings 1 Ltd.—acquired from Sea Containers a substantial number of Orient-Express Hotels class B common shares pursuant to an agreement in place at the time of the initial public offering of Orient-Express Hotels in August 2000. The shares now owned by Holdings 1 represent about 76% of the combined voting power of all Orient-Express Hotels common shares outstanding. As a result, although three directors and officers of Sea Containers are on the board of directors of Orient-Express Hotels, Sea Containers no longer has voting control of Orient-Express Hotels.

        Since November 14, 2002, Sea Containers has owned less than a majority of the common shares of Orient-Express Hotels (disregarding the shares owned by Holdings 1). Therefore, Orient-Express Hotels is not any longer a consolidated subsidiary in Sea Containers' financial statements. Instead, Sea Containers accounts for its investment in Orient-Express Hotels using the equity method of accounting.

Other Risks

Currency fluctuations may have a material adverse effect on Sea Containers' financial statements and/or its operating margins.

        Substantial portions of the revenue and expenses of Sea Containers are denominated in non-U.S. currencies such as the British pound sterling and the euro. In addition, we buy assets and incur liabilities in these foreign currencies. Foreign exchange rate fluctuations may have a material adverse effect on our financial statements and/or our operating margins.

        Our financial statements, which are presented in U.S. dollars, can be impacted by foreign exchange fluctuations through both

•

translation risk, which is the risk that our financial statements for a particular period or as of a certain date depend on the prevailing exchange rates of the various currencies against the U.S. dollar, and



•

transaction risk, which is the risk that the currency of our costs and liabilities fluctuates in relation to the currency of our revenue and assets, which fluctuations may adversely affect our operating margins.

        With respect to translation risk, even though the fluctuations of currencies against the U.S. dollar can be substantial and therefore significantly impact comparisons with prior periods, the translation impact is a reporting consideration and does not affect the underlying results of operations, as

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transaction risk does. As far as we can, we match foreign currency revenues and costs and assets and liabilities to provide a natural hedge against translation risks although this is not a perfect hedge.

        With respect to transaction risk, although this risk may adversely affect operating margins, we may mitigate our exposure by entering into forward foreign exchange contracts from time to time.

Sea Containers' directors and officers may control the outcome of most matters submitted to a vote of its shareholders.

        A subsidiary of Sea Containers—Contender 2 Ltd.—together with Sea Containers' directors and executive officers, currently hold about 84% of the voting power for most matters submitted to a vote of Sea Containers' shareholders. Under Bermuda law, the class B common shares of Sea Containers owned by Contender 2, representing about 78% of the combined voting power of the class A and class B common shares, are outstanding and may be voted by Contender 2. The manner in which Contender 2 votes its class B common shares is determined by the directors of Contender 2 (two of whom—James B. Sherwood and John D. Campbell—are also directors of Sea Containers and one of whom—James B. Sherwood—is also an executive officer of Sea Containers), consistently with the exercise by those directors of their fiduciary duties to Contender 2. Contender 2 is able to elect a majority of the members of the Board of Directors of Sea Containers, to control the outcome of most matters submitted to a vote of the shareholders of Sea Containers and to block a number of matters relating to a change of control of Sea Containers.

Provisions in Sea Containers' charter documents may discourage potential acquisitions of Sea Containers, even those which the holders of a majority of its class A common shares might favor.

        Sea Containers' memorandum of association and bye-laws contain provisions that could make it harder for a third party to acquire us without the consent of Sea Containers' board of directors. These provisions include

•

supermajority shareholder voting provisions for the removal of directors from office with or without cause, and for "business combination" transactions with beneficial owners of shares carrying 15% or more of the votes which may be cast at any general meeting of Sea Containers, and



•

limitations on the voting rights of such 15% beneficial owners.

        Also, our board of directors has the right under Bermuda law to issue preferred shares without shareholder approval, which could be done to dilute the stock ownership of a potential hostile acquirer. Although we believe these provisions provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our board of directors, these provisions apply even if the offer may be considered beneficial by many shareholders.

        These provisions are in addition to the ability of Contender 2 and directors and officers to vote shares representing a significant majority of the total voting power of our common shares. See the "risk factor" immediately above. Also, the rights to purchase series A junior preferred shares, one of which is attached to each class A and class B common share, may have antitakeover effects.

We cannot assure you that a judgment of a United States court for liabilities under U.S. securities laws would be enforceable in Bermuda, or that an original action can be brought in Bermuda against Sea Containers for liabilities under U.S. securities laws.

        Sea Containers is a Bermuda company, a majority of its directors and officers are residents of Bermuda, the United Kingdom and elsewhere outside the United States, and most of its assets and the

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assets of its directors and officers are located outside the United States. As a result, it may be difficult for you to

•

effect service of process within the United States upon Sea Containers or its directors and officers, or



•

enforce judgments obtained in United States courts against Sea Containers or its directors and officers based upon the civil liability provisions of the United States federal securities laws.

        Sea Containers has been advised by its Bermuda counsel, Appleby Spurling Hunter, that there is doubt

•

whether a judgment of a United States court based solely upon the civil liability provisions of the United States federal securities laws would be enforceable in Bermuda against Sea Containers or its directors and officers, and



•

whether an original action could be brought in Bermuda against Sea Containers or its directors and officers to enforce liabilities based solely upon the United States federal securities laws.

Forward-Looking Statements

        This prospectus supplement and the accompanying prospectus contain or incorporate by reference forward-looking statements, including statements regarding, among other items,

•

Sea Containers' ability to repay or extend the maturities of its outstanding indebtedness,



•

competitive factors in its businesses,



•

the ability of Silja to offer duty-free shopping,



•

the operations of Silja,



•

deployment of fast speed ferries,



•

future legislation in any country where Sea Containers has significant assets or operations,



•

strikes or other labor disruptions,



•

actual or threatened acts of terrorism and the effects of the war in Iraq,



•

currency fluctuations, and



•

trends in Sea Containers' future operating performance.

        We have based these forward-looking statements largely on our expectations, as well as assumptions we have made and information currently available to our management. When used in this prospectus supplement and the accompanying prospectus or in incorporated reports, the words "anticipate," "believe," "estimate," "expect" and similar expressions, as they relate to Sea Containers or its management, are intended to identify forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, some of which are beyond our control. Actual results could differ materially from those anticipated, as a result of the factors described under "Risk Factors" in this prospectus supplement and other factors. Furthermore, in light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus and incorporated reports might not transpire.

        Except as required by law, Sea Containers undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Use of Proceeds

        We estimate that Sea Containers will receive net proceeds from the issuance of the notes of about $96,500,000, after deducting the underwriting discount and estimated offering expenses of $700,000. We will use $79,729,000 of the net proceeds to repay and redeem Sea Containers' 12¹/2% senior subordinated debentures due December 1, 2004. The remaining net proceeds will be used to pay down other debt or make acquisitions, or for other corporate purposes. Monies used to pay any revolving debt may be immediately reborrowed and used for our general corporate purposes.

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Capitalization

        The following table shows the consolidated cash and capitalization of Sea Containers and its subsidiaries as of December 31, 2003, and as adjusted to reflect the sale of the notes covered by this prospectus supplement and the application of part of the proceeds therefrom to pay estimated offering expenses of $700,000 and to repay our $79,729,000 of 12¹/2% senior subordinated debentures due 2004:

(1)

Included in cash is approximately $46,700,000 held by GNER under a liquidity maintenance requirement imposed by the U.K. Strategic Rail Authority, and there are restricted deposits in other subsidiaries of approximately $8,000,000. Additionally, Sea Containers' subsidiaries have working capital requirements which reach their height in the first half of the year.

(2)

There were additional working capital lines of credit in place, but not drawn, amounting to $130,000,000.

(3)

The aggregate principal amount of the notes offered hereby is $103,000,000, but they are being issued at a net discount which will be amortized over the life of the notes.

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(4)

The aggregate principal amount of the 10³/4% senior notes is $115,000,000, but they were originally issued at a net discount which is being amortized over the life of the 10³/4% senior notes. The unamortized discount amounted to $573,000 at December 31, 2003.

(5)

The aggregate principal amount of the 12¹/2% senior subordinated debentures is $79,729,000, but they were originally issued at a net discount which is being amortized over the life of the debentures. The unamortized discount amounted to $158,000 at December 31, 2003.

(6)

Excludes 260,050 class A common shares reserved for issuance pursuant to options granted to employees, and 906,713 class A common shares reserved for issuance under Sea Containers' Dividend Reinvestment and Share Purchase Plan.

(7)

Excludes 478,622 shares reserved for issuance upon the conversion of the $7.25 convertible cumulative preferred shares.

(8)

Under Bermuda law, the class B common shares held by a subsidiary of Sea Containers are issued and outstanding and have the same voting rights as all other issued and outstanding class B common shares.

Relationship with Orient-Express Hotels

        Sea Containers currently owns 11,943,901 class A common shares of Orient-Express Hotels and 2,459,399 class B common shares of Orient-Express Hotels, representing about 42% of Orient-Express Hotels' outstanding class A and class B common shares (excluding class B common shares owned by Orient-Express Holdings 1 Ltd.) and having about 15% of the combined voting power of all outstanding Orient-Express Hotels class A and class B common shares (including class B common shares owned by such subsidiary).

        Orient-Express Hotels has filed a registration statement with the SEC (which was declared effective on February 19, 2003) for sales by Sea Containers from time to time, in one or more transactions, of any or all of its remaining 11,943,901 class A common shares of Orient-Express Hotels plus the 2,459,399 Orient-Express Hotels class A common shares issuable upon conversion of 2,459,399 Orient-Express Hotels class B common shares held by Sea Containers.

Description of the Notes

        In this "Description of the Notes," the words "Sea Containers" refer only to Sea Containers Ltd. and not to any of its Subsidiaries, except for the purposes of financial data determined on a consolidated basis. The word "notes" refers to the 10¹/2% Senior Notes due May 15, 2012, and, unless the context requires otherwise, also refers to book-entry interests in the notes. The definitions of certain other terms used in this description are set forth throughout the text or under "—Definitions."

        Sea Containers will issue the notes under an indenture dated as of May 1, 2004 (the "Indenture") between Sea Containers and The Bank of New York, as trustee (the "Trustee"). The Indenture is subject to and governed by the Trust Indenture Act of 1939. The following is a summary of all the material provisions of the notes and the Indenture and does not include all the provisions of the Indenture. We urge you to read the Indenture because it fully defines your rights. You may obtain a copy of the Indenture from Sea Containers without charge. See "Where You Can Find More Information" in the accompanying prospectus.

Maturity, Principal and Interest

        The notes will mature on May 15, 2012 and will be unsecured senior obligations of Sea Containers. Sea Containers will issue the notes in the aggregate principal amount of $103 million. Subject to the covenant described under "Covenants—Limitation on Indebtedness", Sea Containers will be permitted

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to issue additional notes ("Additional Notes") from time to time. The notes and any Additional Notes that are issued will be treated as a single class for all purposes of the Indenture, including those with respect to waivers, amendments, redemptions and offers to purchase. Unless the context otherwise requires, references to the "notes" for all purposes of the Indenture and in this Description of the Notes include references to any Additional Notes that are issued.

        Interest on the notes will accrue at the rate of 10¹/2% per year and will be payable twice a year in arrears on May 15 and November 15 in cash, commencing on November 15, 2004, to the Holders of notes at the close of business on the April 30 or October 31 immediately preceding an interest payment date. Interest on the notes will accrue from the expiration date or from the most recent interest payment date to which interest has been paid.

        Principal of, and any premium and interest on, the notes are payable, and, except as described below, the notes are exchangeable and transferable, at the office or agency of Sea Containers in the Borough of Manhattan, City of New York, maintained for such purposes; however, Sea Containers may choose to pay interest by mailing checks to the Holders of notes. For the purpose of paying interest on the notes, Sea Containers will at all times have a paying agent (which may be the Trustee) that either will have an office or agency in the Borough of Manhattan, City of New York, or will make arrangements for interest checks to be paid at a bank, trust company or other agency located in the Borough of Manhattan, City of New York. Sea Containers has appointed The Bank of New York as the initial paying agent for the notes. Until otherwise designated by Sea Containers, Sea Containers' office or agency in New York will be the Trustee's office located at 101 Barclay Street, New York, New York 10286.

        The notes are issued in fully registered form without coupons, in denominations of $1,000 and any integral multiple of $1,000. There will be no service charge for any registration of transfer, exchange or redemption of the notes, except that in certain circumstances there may be a service charge for any tax or other governmental charge that may be imposed in connection therewith. See "—Book-Entry; Delivery and Form" for a discussion of certain other matters regarding the form, delivery, transfer and exchange of the notes.

Ranking

        The Indebtedness evidenced by the notes ranks equal in right of payment with all other Senior Indebtedness of Sea Containers, and senior in right of payment to all existing and future Subordinated Indebtedness of Sea Containers. The principal amount of Sea Containers' Senior Indebtedness outstanding on December 31, 2003, on a pro forma basis after giving effect to the issuance of the notes and the application of the net proceeds therefrom, would have been $646,855,000 ($103,000,000 of which would have been represented by the notes). At December 31, 2003 Sea Containers' had $79,729,000 of Subordinated Indebtedness outstanding, consisting entirely of the 12¹/2% Senior Subordinated Debentures that will be redeemed with part of the net proceeds from this offering. In addition to its outstanding Senior Indebtedness, Sea Containers, as of December 31, 2003, had guaranteed $537,763,000 of its Subsidiaries' Indebtedness and $19,088,000 of Orient-Express Hotels' Indebtedness. The guarantee of Orient-Express Hotels' Indebtedness was released in March 2004. Notwithstanding the covenants in the Indenture restricting the Incurrence of Indebtedness, Sea Containers may Incur additional Indebtedness. See "Covenants—Limitation on Indebtedness."

        To the extent that any Indebtedness of Sea Containers is secured by liens on the assets of Sea Containers or its Subsidiaries, the holders of such secured Indebtedness will have a claim prior to the Holders of the notes as to those assets and the notes will be effectively subordinated to all present and future secured Indebtedness to the extent of the assets securing such Indebtedness. At December 31, 2003, on a pro forma basis after giving effect to the issuance of the notes and the application of the net proceeds therefrom, approximately $237,476,000 out of the total of $646,855,000 of Senior Indebtedness

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of Sea Containers (excluding guaranties of Indebtedness of its Subsidiaries and Orient-Express Hotels) was secured by assets of Sea Containers or its Subsidiaries. Also, notwithstanding the covenants in the Indenture restricting the Incurrence of Indebtedness and Liens on assets and property of Sea Containers and its Subsidiaries, Sea Containers and its Subsidiaries may Incur additional secured Indebtedness (see "Covenants—Limitation on Indebtedness," "Covenants—Restriction on Indebtedness and Preferred Shares of Subsidiaries" and "Covenants—Restrictions on Liens"). Under the Indenture, Sea Containers and its Subsidiaries may Incur a variety of Permitted Liens, including Liens securing Indebtedness of up to (a) 90% of the net book value of the Container Assets of Sea Containers and its Subsidiaries, (b) 90% of the net book value of the Passenger Transport Assets of Sea Containers and its Subsidiaries, (c) 80% of the Fair Market Value of the Leisure Industry Assets of Sea Containers and its Subsidiaries, and (d) 80% of the net book value of the Other Assets of Sea Containers and its Subsidiaries (see "Covenants—Restrictions on Liens" and "Definitions—Permitted Liens").

        In addition, the notes are not guaranteed by any Subsidiary of Sea Containers and as a result will effectively be subordinated to all present and future Indebtedness of the Subsidiaries of Sea Containers, which at December 31, 2003, amounted to $970,074,000, as well as junior to all other liabilities of the Subsidiaries. Also GE SeaCo, which is not consolidated for accounting purposes with Sea Containers, had $510,552,000 of Indebtedness at December 31, 2003. Notwithstanding the covenants in the Indenture restricting the Incurrence of Indebtedness and Liens on assets and property of the Subsidiaries of Sea Containers, the Subsidiaries may Incur additional Indebtedness (see "Covenants—Limitation on Indebtedness" and "Covenants—Restriction on Indebtedness and Preferred Shares of Subsidiaries"), including secured Indebtedness (see "Covenants—Restrictions on Liens"). If any Subsidiary of Sea Containers is dissolved, declared bankrupt, liquidated or reorganized, Holders of notes will not receive from such Subsidiary any amounts in respect of the notes until after the payment in full of the claims of the creditors of such Subsidiary and the liquidation preference of any preferred shares of such Subsidiary remaining outstanding.

        Sea Containers' assets are located in numerous places around the world, and many such assets are movable and therefore could be in various locations from time to time. It is possible that in the event of a bankruptcy or similar proceeding, the courts of one or more of the countries where Sea Containers' assets at the time are located might assert jurisdiction over any proceedings to establish and enforce creditors' rights under the laws of such countries. We cannot assure you that a bankruptcy or similar proceeding would ultimately be adjudicated by a United States bankruptcy court.

Optional Redemption

        Sea Containers may, at its option, redeem all or some of the notes at any time on or after May 15, 2008, on not less than 30 nor more than 60 days' prior notice in amounts of $1,000 or integral multiples of $1,000, at the following redemption prices (expressed as percentages of the principal amount) during the 12-month period beginning May 15 in each year indicated below:

in each case together with accrued and unpaid interest to the redemption date, subject to the right of Holders on relevant record dates to receive interest due on an interest payment date that is on or prior to the redemption date. If less than all of the notes are to be redeemed, the Trustee will select the notes or portions thereof to be redeemed by prorating, by lot or by any other method that the Trustee deems fair and reasonable.

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        The Indenture provides that, in the event of a Change of Control, each Holder of notes will have the right to require Sea Containers to repurchase such Holder's notes at 101% of the principal amount thereof, together with accrued and unpaid interest. See "Purchase of Notes upon Change of Control." In addition, if, at any time, the Consolidated Tangible Net Worth of Sea Containers and its Subsidiaries at the end of each of any two consecutive fiscal quarters is less than $175,000,000, Sea Containers shall make an offer to repurchase a specified amount of notes. See "Covenants—Maintenance of Consolidated Tangible Net Worth."

        The notes will not have the benefit of any sinking fund. Therefore, unless Sea Containers exercises its right of optional redemption, or is required to repurchase the notes under the Indenture (for example, upon a Change of Control), all of the notes will mature and become due and payable on May 15, 2012, and Holders of the notes will not have any right to compel Sea Containers to pay the principal amount of the notes at any time prior to that date.

Optional Tax Redemption

        The notes may be redeemed at the option of Sea Containers, in whole but not in part, at any time on not less than 30 or more than 60 days' prior notice given as provided in the Indenture, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest to the date fixed for redemption if, as a result of any change in or amendment to the laws or any regulations or rulings promulgated thereunder of the jurisdiction (or of any political subdivision or taxing authority of or in the jurisdiction) in which Sea Containers is incorporated or resident for tax purposes, or any change in the official application or interpretation of such laws, regulations or rulings, or any change in the official application or interpretation of, or any execution of or amendment to, any treaty or treaties affecting taxation to which such jurisdiction, political subdivision or taxing authority is a party (a "Change in Tax Law") that becomes effective on or after the date of issue of the notes, Sea Containers is or would be required on the next succeeding interest payment date to pay additional amounts with respect to the notes as described below under "Payment of Additional Amounts" and Sea Containers cannot avoid the payment of such additional amounts by any reasonable measures available to it.

        The notes may also be redeemed at the option of Sea Containers in whole but not in part on not less than 30 nor more than 60 days' prior notice given as provided in the Indenture at any time at a redemption price equal to the principal amount thereof plus accrued and unpaid interest to the date fixed for redemption, if the Person formed by a consolidation or amalgamation of Sea Containers or into which Sea Containers is merged or to which Sea Containers conveys, transfers or leases its properties and assets substantially as an entirety is required, as a consequence of such consolidation, amalgamation, merger, conveyance, transfer or lease and as a consequence of a Change in Tax Law occurring after the date of such consolidation, amalgamation, merger, conveyance, transfer or lease, to pay additional amounts as described below in respect of any tax, assessment or governmental charge imposed on any Holder. See "Merger and Sale of Assets."

        Sea Containers will also pay, or make available for payment, to Holders on the redemption date any additional amounts (as described under "Payment of Additional Amounts" below) resulting from the payment of such redemption price.

Payment of Additional Amounts

        If the jurisdiction (or any political subdivision or taxing authority of or in the jurisdiction) in which Sea Containers is incorporated or resident for tax purposes at any time requires Sea Containers to deduct or withhold, for any present or future taxes, assessments or other governmental charges, any amounts Sea Containers must pay under the notes to a Holder who is not a resident of such jurisdiction for purposes of such tax, assessment or governmental charge, Sea Containers will pay such additional amounts to such non-resident Holder of a note as additional interest as may be necessary in

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order that the net amounts paid to such Holder after such deduction or withholding will be not less than the amounts specified in such note to which the Holder is entitled with respect to such note. However, Sea Containers will not be required to make any payment of additional amounts for or on account of

(a)

any tax, assessment or other governmental charge that would not have been imposed but for the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, trust, partnership or corporation) and the taxing jurisdiction or any political subdivision or territory or possession thereof or area subject to its jurisdiction, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having had a permanent establishment therein, or the presentation of a note (where presentation is required) for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later,



(b)

any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge,



(c)

any tax, assessment or other governmental charge that is payable otherwise than by withholding from payments of or in respect of principal of, or any premium or interest on, the notes,



(d)

any tax, assessment or other governmental charge that is imposed or withheld because the Holder or the beneficial owner of the note failed to comply with a request of Sea Containers addressed to the Holder to provide information, documents and other evidence concerning the nationality, residence or identity of the Holder or such beneficial owner, or to make and deliver any declaration or other similar claim (other than a claim for refund of a tax, assessment or other governmental charge withheld by Sea Containers) or satisfy any information or reporting requirement, and such information, documents, evidence or declaration is required or imposed by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such tax, assessment or other governmental charge, or



(e)

any combination of items (a), (b), (c) and (d) above.

        Also, Sea Containers will not pay any such additional amounts to any Holder of a note who is a fiduciary or partnership, or is not the sole beneficial owner of such payment, to the extent that the beneficiary or settlor with respect to such fiduciary, or a member of such partnership, or another beneficial owner of such payment would be required, by the laws of the jurisdictions in which Sea Containers is incorporated or resident for tax purposes (or any political subdivision or taxing authority of or in those jurisdictions), to include such payment in its income for tax purposes and would not have been entitled to such additional amounts had it been the Holder of such note.

        Additional amounts may also be payable in the event of certain consolidations, amalgamations, mergers or sales of assets. See "Optional Tax Redemption" above.

        In the opinion of Appleby Spurling Hunter, Bermuda counsel to Sea Containers, and subject to the assumptions and qualifications contained in the opinion of that firm, under Bermuda law as applied and interpreted on the date of this prospectus supplement,

•

there is no Bermuda income tax, withholding tax, capital gains tax or capital transfer tax and, even if such taxes were to be enacted, pursuant to an undertaking from the Minister of Finance of Bermuda which is effective until March 28, 2016, (a) Sea Containers would not be required to deduct or withhold on account of Bermuda income tax from payments made under the notes and (b) Holders of the notes who are not treated as resident or ordinarily resident in Bermuda generally would not be subject to any Bermuda taxation of capital gains realized on the disposition of the notes,

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•

notes that are not treated as situated in Bermuda and are beneficially owned by an individual domiciled outside Bermuda will not be subject to Bermuda inheritance tax, and



•

no Bermuda stamp duty or stamp duty reserve tax will be imposed on the issuance of the notes and no Bermuda stamp duty is payable on any transfer of notes.

Covenants

        The Indenture provides that Sea Containers and its Subsidiaries will be subject to the following covenants. The Indenture also provides that if no Default or Event of Default has occurred and is continuing, and if the ratings assigned to the notes by Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., and Moody's Investors Service, Inc. are equal to or higher than BBB- and Baa3, or their respective equivalents (the "Investment Grade Ratings"), and even though the notes may later cease to have such a rating, Sea Containers and its Subsidiaries will not be subject to the provisions of the Indenture described below under "Limitation on Indebtedness," "Limitation on Restricted Payments," "Transactions with Affiliates," "Restriction on Indebtedness and Preferred Shares of Subsidiaries," "Disposition of Proceeds of Asset Sales," "Maintenance of Consolidated Tangible Net Worth," and clauses 3 and 4 of "Merger and Sale of Assets."

Limitation on Indebtedness

        Sea Containers will not, and will not permit any of its Subsidiaries to, Incur any Indebtedness (excluding Permitted Indebtedness) unless, at the time of such Incurrence, and after giving effect thereto on a pro forma basis, Sea Containers' Cash Flow Coverage Ratio for the Reference Period would have equaled or exceeded 1.75 to 1.0.

Limitation on Restricted Payments

        Sea Containers will not, and will not permit any of its Subsidiaries to, directly or indirectly, make a Restricted Payment, which is defined as

•

the declaration or payment of any dividend on, or the distribution to holders of, any shares of its or a Subsidiary's Capital Stock (other than dividends or distributions payable in shares of its or such Subsidiary's Capital Stock or in options, warrants or other rights to purchase such Capital Stock, but excluding dividends or distributions payable in Redeemable Capital Stock or in options, warrants or other rights to purchase Redeemable Capital Stock) (any such declaration, payment or distribution, a "Restricted Dividend Payment"),



•

the purchase, redemption, acquisition or retirement for value of any Capital Stock of Sea Containers or any Subsidiary or any options, warrants or other rights to acquire such Capital Stock (except pursuant to mandatory sinking fund requirements or at the Stated Maturity thereof, which payments may be made at any time during the year prior to the required sinking fund payment date or Stated Maturity) (any such purchase, redemption, acquisition or retirement for value, a "Restricted Capital Stock Redemption Payment"),



•

any voluntary or optional principal payment, or voluntary or optional redemption, repurchase, defeasance or other acquisition or retirement for value, of Indebtedness of Sea Containers that is subordinated in right of payment to the notes (except pursuant to mandatory sinking fund requirements or at the Stated Maturity thereof, which payments may be made at any time during the year prior to the required sinking fund payment date or Stated Maturity), or



•

any Investment (other than any Permitted Investment) in any Person other than a Subsidiary and other than a Person that becomes a Subsidiary as a result of such Investment,

unless at the time of and after giving effect to the proposed Restricted Payment (the amount of which, if other than cash, will be as determined by the board of directors of Sea Containers, whose determination will be conclusive and evidenced by a board resolution),

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(1)

no Default or Event of Default shall have occurred and be continuing or shall occur as a result of such Restricted Payment,



(2)

Sea Containers could Incur at least $1.00 of additional Indebtedness under the "Limitation on Indebtedness" covenant described above (excluding Permitted Indebtedness), and



(3)

the aggregate amount of all Restricted Payments declared or made after July 1, 1996 (the date specified in the corresponding clause in each of Sea Containers' Other Senior Note Indentures) will not exceed the sum of



(A)

50% of the aggregate cumulative Consolidated Net Income Available For Restricted Payments accrued on a cumulative basis during the period (taken as one accounting period) beginning on April 1, 1993 (the date specified in the corresponding clause in each of Sea Containers' Other Senior Note Indentures) and ending on the last day of Sea Containers' last fiscal quarter ending prior to the date of such proposed Restricted Payment (or, if such aggregate cumulative Consolidated Net Income Available For Restricted Payments shall be a loss, minus 100% of such loss),



(B)

the aggregate net proceeds, including the Fair Market Value of property other than cash (as determined by Sea Containers' board of directors), received after February 1, 1998 (the date specified in the corresponding clause in each of Sea Containers' Other Senior Note Indentures) by Sea Containers from the issuance or sale (other than to any of its Subsidiaries) of shares of Capital Stock of Sea Containers (other than Redeemable Capital Stock) or warrants, options or rights to purchase such shares of Capital Stock of Sea Containers (other than Redeemable Capital Stock),



(C)

the aggregate net proceeds, including the Fair Market Value of property other than cash (as determined by Sea Containers' board of directors), received after February 1, 1998 (the date specified in the corresponding clause in each of Sea Containers' Other Senior Note Indentures), by Sea Containers (other than from any of its Subsidiaries) upon the exercise of options, warrants or rights to purchase shares of Capital Stock of Sea Containers (other than Redeemable Capital Stock),



(D)

the aggregate net proceeds, including the Fair Market Value of property other than cash (as determined by Sea Containers' board of directors), received after February 1, 1998 (the date specified in the corresponding clause in each of Sea Containers' Other Senior Note Indentures), by Sea Containers from the issue or sale of debt securities or Redeemable Capital Stock that, in either case, have been converted into or exchanged for Capital Stock of Sea Containers (other than Redeemable Capital Stock), plus the aggregate cash received by Sea Containers at the time of such conversion or exchange,



(E)

an amount equal to the net reduction after February 1, 1998 (the date specified in the corresponding clause in each of Sea Containers' Other Senior Note Indentures), in Investments in any third Person not a Subsidiary of Sea Containers resulting from payments of interest on Indebtedness, dividends, repayments of loans or advances, or other transfers of assets, in each case to Sea Containers or any Subsidiary from any such third Person, but only to the extent such payments



i.

were not otherwise included in the Consolidated Net Income of Sea Containers and its Subsidiaries,



ii.

were not deducted from the Investment of Sea Containers in any third Person not a Subsidiary pursuant to clause 4 of the definition of Permitted Investments in "Definitions" below, and



iii.

do not exceed in the case of any such third Person the amount of Investments previously made by Sea Containers or any Subsidiary in such third Person, and



(F)

$15,000,000.

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        Management estimates that as of December 31, 2003, the aggregate amount available for Restricted Payments would have been approximately $199,000,000 under the Indenture and the other agreements governing Sea Containers' Indebtedness. Notwithstanding anything to the contrary in the Indenture, the aggregate amount of all Restricted Dividend Payments and Restricted Capital Stock Redemption Payments made out of funds available therefor under the immediately foregoing paragraphs (A), (B), (C), (D), (E) and (F) shall not exceed the sum of (i) $60 million and (ii) the sum of (I) any funds accrued under the immediately foregoing paragraph (A) during the period beginning on the date of the Indenture and ending on the last day of Sea Containers' last fiscal quarter ending prior to the date of such Restricted Payment, (II) any funds received after the date of the Indenture under the immediately foregoing paragraphs (B), (C) and (D) and (III) an amount equal to any net reduction after the date of the Indenture under the immediately foregoing paragraph (E).

        This Restricted Payments covenant will not be violated by reason of, and will not take into account,

(a)

the payment of any dividend within 60 days after the date of its declaration if such payment would have been permitted under clauses (1), (2) and (3) above on the declaration date, in which event such dividend will be deemed to have been paid on the declaration date for purposes of this Restricted Payments covenant,



(b)

a Restricted Payment by a Subsidiary to Sea Containers or to another Subsidiary of Sea Containers or by Sea Containers to a Subsidiary of Sea Containers, provided that any Restricted Payment by a Subsidiary of Sea Containers relating to Capital Stock held by Sea Containers or a Subsidiary of Sea Containers may also be made to Persons other than Sea Containers or a Subsidiary so long as such Restricted Payment is made ratably based on the respective ownership interests in such Capital Stock of Sea Containers or such Subsidiary and such other Persons, or



(c)

the issuance of Capital Stock (other than Redeemable Capital Stock) upon the exercise by Sea Containers' employees of options issued pursuant to employee benefit plans, or



(d)

as long as no Default or Event of Default is in existence,



(I)

the acquisition or retirement for value of any shares of Capital Stock or any Indebtedness subordinated in right of payment to the notes prior to a Stated Maturity of such Indebtedness by exchange for, or upon conversion of, or out of the proceeds of the substantially concurrent sale for cash (other than to a Subsidiary) of, other shares of Capital Stock (other than Redeemable Capital Stock) of Sea Containers or Indebtedness of the type, and satisfying the requirements, described in clause 9 of the definition of Permitted Indebtedness,



(II)

the payment of a dividend on preferred shares (including Redeemable Capital Stock) outstanding on the date of the Indenture, and preferred shares issued to refinance such preferred shares as permitted by clause (I) above at rates not in excess of those set forth in the terms of such preferred shares on the date of the Indenture, and



(III)

the payment of dividends on Redeemable Capital Stock issued after the date of the Indenture, or



(e)

the redemption, acquisition or retirement for value of the 12¹/2% Senior Subordinated Debentures with the net proceeds of the notes.

        However, the aggregate net proceeds, including the Fair Market Value of property other than cash, received by Sea Containers from the issuance or sale of shares of Capital Stock (other than Redeemable Capital Stock) of Sea Containers pursuant to clauses (c) and (d)(I) above will not be counted for purposes of increasing the available amount of Restricted Payments pursuant to clause (3)(B) above.

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Restrictions on Liens