partiamo

As I read the announcement in Cruise Industry News,

Royal Caribbean Group today announced it has entered into a definitive agreement to sell its Azamara brand to Sycamore Partners, a private equity firm specializing in consumer, retail and distribution investments, in an all-cash carve-out transaction for $201 million,

Sycamore Partners will acquire the entire Azamara brand, including its three-ship fleet and associated intellectual property.

So, 3 ships for $201 million equates to $67 million per ship.  These ships all date from 1999 to 2000, so not youngsters.  Ships like these headed for scrap probably are not worth more than $15 million.  So, it appears Sycamore is in this to improve the brand.  However, it appears they will need to set up a whole new back office.  If they hire the right people to run this line they could make a go of it.

As everyone says, we will see.

Sorry if I did not explain that well.  As I mentioned, I have a cruise in April.  I will be looking at the experience that happens between August and December to determine whether I make final payment.  So, I wondered what should I expect between August and December.  I think it unreasonable to assume out of the thousands of cruises in those 5 months no one will catch the virus on any cruise.  That somehow cruise ships will be totally immune to the virus.  Even giving strict protocols in place (which we do not yet know what they are).

So I wanted to get an idea whether folks thought there is some acceptable level of covid cases on cruise ships.  For some people, it would be zero, that is, they would not go on a cruise if a single person on a single ship came down with the virus.  I would not apply that test to my going on a cruise.  However, I have not determined what level I would accept.  For instance if less than 1% of people came down with the virus on less than 10% of cruises would that be OK.

So, I wanted to get an idea about how others on this board would look at this situation.  Hope that is a better explanation.

I do not have a cruise until next April, but I started wondering what level of covid infection would be acceptable and I would still go on a cruise?  For example, by my calculation there are some 300 cruises scheduled for August and September 2020 in the Caribbean.  From 3 days on up.  It seems to me, no matter what protocols are in place, there will be some level of infection on these cruises, just as there is, and will be, some level throughout the US.  So, what level would people find acceptable and still go on the cruise?

1.  Would it be one case on any cruise?

2.  Would it be only X% of all cruises, even if but one case?

3.  Would it be a number not to exceed X% on any and all ships?

4.  Or something else I have not considered?

I would love to hear your comments.

I understand that a stressed company has to have liquidity to see it get back to profitability.  I think RCL has pulled together sufficient liquidity to get it to September and probably December.  However, whenever I look at a stressed company I also take into account their debt and liquidation value in the event that some creditor gets antsy and leaves the reservation.  Believe me, I have seen that happen.

I have been in RCL at about 26 and out at 44.  Only 500 shares, so no big deal.  I have been trying to wrap my head around RCL debt and value of ships.  The recent 10-K shows the following debt in millions:

Senior notes $1,746

Secured senior notes 663

Unsecured term $2,807

Unsecured revolver $165

Commercial paper $1,434

USD unsecured term $3,520

Euro unsecured term $677

Financed leases $230

Total 11,242

Net property and equipment $25,467

Now creditors are all in different positions.  It appears from the 10K that very little of the debt is secured by ships, although I believe debt taken on to increase liquidity since the 10K does have ships as collateral.  So, the question is what are the value of these ships in the event of liquidation?  If creditors believe there is large value, then they will not rush to put RCL in banktrupcy.  On the other hand, if they are worried about the value then perhaps some creditor will act precipitously and start a stampede.

I would think, since the P&E is net of depreciation of some $10,000, that RCL's assets are sufficient to allow it to go for some time in the future and give creditors reason to be confident.  Anyone agree or disagree?

I have no upcoming cruises with Regent, but have sailed with them in the past.  Someone posted concerning whether there was a priority claim in the event of a bankruptcy of NCL.  Here is some possibly useful info

Chapter 13 bankruptcy. In this chapter, all priority claims must get paid in full through the plan. For instance, your plan payment will have to be sufficient to pay all of your back child support, taxes, and other priority claims. If the proposed payment isn't sufficient to cover these claims, your Chapter 13 plan won't get confirmed and your case will be dismissed.

The following is a list of the ten categories of priority claims, along with a brief explanation about each type.

Customer deposit claims. Claims for deposits placed by individuals for the purchase or lease of property or services for personal or household use, when the property or services were not delivered or otherwise received are limited to $3,025 per claim (as of April 1, 2019). Examples of these type of claims include layaway payments, home repair deposits, and deposits made to a travel agency.

Hope this info helps.

Our party of four sailed in the YC on Bellissima out of Dubai on b2b 7 day cruises in January 2020.  I will review the experience in bullet points so as not to make this too long.  If anyone would like more detail, please let me know

1.  Overall YC.  Excellent.  More than lived up to expectations.  The service was incredible, best I have experienced, including the service on Oceania and Regent.

2.  Butler.  I have cruised previously with butler service, but this was over the top.  He did everything for us.  Escorted us to shows, escorted us to immigration for the second cruise and escorted us off the ship and waited with us until our driver showed up.  And, he took over and placed an elevator out of service so that only we could use that elevator.  Unbelievable.

3.  Cabin.  Deluxe suite.  Although not large, well appointed, very clean and adequate storage.  Definitely pleased with the room.

4.  Servers.  Could not do enough.  Tried mightily to please.  

5.  Food.  Here was a problem.  The food is international in presentation and that is because these cruises were truly international.  Americans were in the clear minority, with the majority being from Italy, Germany and France.  But, all over the world as well.  As such, the menus appealed to an international pallet, and 3 of our party did not have the appreciation for it.  The result being they had trouble finding something they liked.  Nevertheless the servers tried to please by making up special pastas and the like.

6.  Dress for dinner.  All over the map.  On regular nights, some showed up in shorts, t-shirts and jeans, but they were in the minority.  Our party dressed country club casual all nights.  On gala nights, some had suits (the minority), some had just ties, some had just jackets and the bulk were CCC.  I saw no one turned away from dinner over dress.

7.  Isolation.  You definitely get the feeling of being isolated in the YC.  For example, the daily planner only listed things in the YC.  We asked the concierge if we could have the ship wide planner delivered to the room, but we never did receive it.  When we retrieved one from customer relations they said, "why do you want that, you're in the yacht club".

8.  There were things on the ship I found strange and never could get an explanation.  Like holding the safety drill when a huge number of passengers were out on excursions, only having to do it a second time.  Or, like announcing at 11:30 PM that there was a mandatory safety drill.  I asked the concierge about that the next day and he shook his head.

9.  The Bellissima is quite a gorgeous ship.

10.  Command of English.  Two languages were used on the ship, Italian and English.  However, most of the crew did not have a good command of English, unlike the other cruise lines I have been on.  This resulted in some mis-communication, but was always resolved.

11.  Ship excursions not handled all that well.  Much confusion on the part of the excursion team.

12.  Cabin telephone and Zoey.  The telephone was unlike any I have ever used, and I never did get the hang of it.  You would call another room, and midway through the conversation the phone would start to play music.  Why?  Who knows.  The butler could not explain it.  And Zoey.  Well Zoey has a long way to go.  The only thing I was able to get it to do was to turn on the television and go to the weather.  Every other command was met with "I did not understand that".

13.  Embarkation.  We went to the wrong door and delivered our luggage.  Eventually we found the proper door and located the YC area, which was roped off from the rest of embarkation.  They asked where our luggage was and we told them we went to the wrong door.  They asked us to be seated and have a refreshment.  Then they escorted us to an immigration officer and gave us our ship pass.  Then they escorted us up to the YC lounge.  Very easy and nice.

14.  Debarkation.  Even easier.  We had to leave by 10 PM the night before the end of the cruise to catch a very early flight.  The butler with a helper escorted us off the ship and waited with us until our driver came.

15.  YC lounge.  Quite luxurious.  Nice bar and almost always some type of food at hand.  Well attended by YC members.

16.  YC Sun Deck.  Plenty of chairs and lounges.  Has a breakfast buffet (we did not use it) and a lunch buffet.  Again, food was the problem for the same reason as above.  For example, you could not get a hot dog or hamburger at the buffet.  But the service was outstanding.

What I can tell you is my wife, who is a picky sleeper, declared the Oceania Mattress the best she has ever slept on. I thought it was pretty comfortable. So, we found out who made the mattress (an Italian company) and the model, thanks to our steward. I found that the company has an agent in Miami with a warehouse.

But then things happened and we never followed through.