What If NCL files for bankruptcy? And we have cruises book ?

[npcl]

Looks like the discussions are starting to give clues to the approach the government might take in any bailout

 

1. Companies would limit executive pay

2. Government would have opportunity to make money on deal probably through some kind of equity position which would probably mean dilution of existing shareholders (better than a BK and wipeout but some loss of shareholder value)

3. Limit corporate ability to do stock buybacks

4. Probably some limits on layoffs.

 

This seems to be what they are talking about with the airlines.

[Lionkingrichard]

20 hours ago, npcl said:

NCLH has 746 million in debt coming due in 2020

 

 

Yes and read the 10K. They refinance it at lower interest rates and save money.

[SouthLyonCruiser]

On 3/19/2020 at 8:48 AM, Ptroxx said:

What insurance company did you use ?  

AIG Travel Guard. We have used it for every cruise we have taken.

We have had one claim when my father in law was diagnosed with cancer the week before our cruise.

I called to file a claim and talked extensively with the representative. They sent me all of the forms and I filled them out, following all of the directions implicitly. I was told not to call concerning my claim for 6 weeks following my filing. I received a check within two weeks. I have seen many complaints about this company; but, something tells me from reading their reviews that they did not follow instructions, thus delaying any returns.

[npcl]

2 hours ago, Lionkingrichard said:

Yes and read the 10K. They refinance it at lower interest rates and save money.

Oh I have read the 10k.  Take a good look at the balance sheet.  High current debt, low current assets. Lots of long term assets but mostly those that cannot be easily converted into case, and where the potential buyers are having their own problems and not in the market.

 

If someone is actually willing to lend them money.  Considering what is going on with the bond markets  with 2020 bonds for CCL now at 29% YTM and RCL at 17% YTM.  Where the fed is having to pump liquidity high grade short term municipal bonds (announced this morning).  Even if they can find the money to refinance I doubt it will be cheaper.

 

Considering that cruising is shut down, the ports are closed around the world, with it being unknown how long it will be before they can actually cruise again.  The lines giving FCC's instead of cash refunds because they cannot afford to refund in cash.

 

Not exactly a good credit risk. The most likely survival being dependent upon money from the government, that will involve severe constraints, most likely including dilution of shareholders.

[Waquoit]

On 3/19/2020 at 5:56 AM, Love my butler said:

You seem to want to put a negative slant on 'quid pro quo'.  Guess what?  It is how business is done, all over the world.  Has been like that for centuries.  It's ok.  I blame the fake news media for feeding the ignorance to the masses.

Except this isn't business, it's our democracy. And the deals are supposed to be for the good of the country not to make one guy look good.

[Lionkingrichard]

26 minutes ago, npcl said:

Oh I have read the 10k.  Take a good look at the balance sheet.  High current debt, low current assets. Lots of long term assets but mostly those that cannot be easily converted into case, and where the potential buyers are having their own problems and not in the market.

 

If someone is actually willing to lend them money.  Considering what is going on with the bond markets  with 2020 bonds for CCL now at 29% YTM and RCL at 17% YTM.  Where the fed is having to pump liquidity high grade short term municipal bonds (announced this morning).  Even if they can find the money to refinance I doubt it will be cheaper.

 

Considering that cruising is shut down, the ports are closed around the world, with it being unknown how long it will be before they can actually cruise again.  The lines giving FCC's instead of cash refunds because they cannot afford to refund in cash.

 

Not exactly a good credit risk. The most likely survival being dependent upon money from the government, that will involve severe constraints, most likely including dilution of shareholders.

As others have posted and in the 10K NCL puts up the ships to secure the loan.

 

They have been borrowing money at LIBOR + 1%!

 

Interest rates have been dropping and banks still need to make money. So they write new loans.

 

They had 1.1 BILLION IN CASH as of last month.

[njhorseman]

1 hour ago, Lionkingrichard said:

As others have posted and in the 10K NCL puts up the ships to secure the loan.

 

They have been borrowing money at LIBOR + 1%!

 

Interest rates have been dropping and banks still need to make money. So they write new loans.

 

They had 1.1 BILLION IN CASH as of last month.

I have no idea where you're getting that number from. Per the consolidated balance sheet on page F-6 of the NCLH 10-K filed Feb 27, 2020, the corporation had about 253 million in cash on hand as of December 31, 2019.

 

You don't even have to go back to the 10-K to find the balance sheet. You can find it in post 88 of this thread .

Edited March 20, 2020 by njhorseman

[sfaaa]

2 hours ago, Waquoit said:

Except this isn't business, it's our democracy. And the deals are supposed to be for the good of the country not to make one guy look good.

Bailing out cruise industry is all about business. 

[npcl]

1 hour ago, Lionkingrichard said:

As others have posted and in the 10K NCL puts up the ships to secure the loan.

 

They have been borrowing money at LIBOR + 1%!

 

Interest rates have been dropping and banks still need to make money. So they write new loans.

 

They had 1.1 BILLION IN CASH as of last month.

If you think so put all of your money into NCLH.  We will see in about 3 months.

 

Not sure exactly where you are getting your data that they had 1.1 billion in cash because that is clearly different from the 10k, or or for that matter any other press release.

 

Yes banks due still need to make money. However, in the last two weeks since the relative calm days of March 4.  You companies pulling money out of money funds, liquidating investments of all kinds to raise cash, the Fed pumping in hundreds of billions into credit facilities in order to try and stabilize them.  In that time NCLH NCLH has supended cruises March 13, most ports around the world has closed, their stock has dropped from $32 a share to 8.51 a share.  They were smart to get the additional revolving credit when they did prior to the massive down turn.  For however long it lasts.

 

In their last filing was a Dec 31st 10k

In that they had  current assets of 730 million including 252 million in cash, 75 million in account receivable, 95 million in inventories, 306 million in prepaid and other assets.  Compared to that they had  3584 million in short term liabilities.  Of which 746 million is debt due this year, 100 million in accounts payable, 782 million is accrued expenses,  1,954 million in advance ticket sales.

 

Note that their advance ticket sales by itself is greater than its total current assets.  Also a big reason why they are pretty much giving everyone FCC's for cancellations because they cannot afford to give cash back.  

 

That means that they are living off what they can borrow because they do not have money coming in.

 

The do have their revolving credit lines totaling 1.55 bn of which the most recent 675 million is due next March.

While they were able to get that facility at relatively low rate by pledging the Epic in order to take out the loan, How many unattached ships do they have.

 

Also note this statement from their 10k

 

Certain of our debt agreements contain covenants that, among other things, require us to maintain a minimum level of liquidity, as well as limit our net funded debt-to-capital ratio, and maintain certain other ratios and restrict our ability to pay dividends. Substantially all of our ships and other property and equipment are pledged as collateral for certain of our debt. We believe we were in compliance with our covenants as of December 31, 2019.

 

They were in compliance at the end of December but are they still?

 

From their operations line they spend about 3,662 million per year on normal operations, Since it takes time to cut back they probably have that same burn rate through March, coupled with full revenue from January and Febuary with their profit margin they will probably be break even, maybe a little above for the first quarter.  However with the dramatic slow down in bookings, even with them trying to attract new bookings and deposits by not saying anything about cruises after the already announced shutdown period (gee I wonder why that is, I doubt its because they seriously expect to return to operations in April).  But after April first there is a limit to how much they can trim expenses from their 10K their annual burn rate is MGA 974 million, Depreciation 646 million (which we can ignore since it is not cash flow), interest expense 272 million and total cruise operating expense 3,663 million.  If we assume that they can cancel all food contacts, except what is necessary for a minimal staffing to maintain the ships lets estimate that they can probably reduce ship operating costs by 75 percent.  Lets also assume that since they cut salaries by 20% that they can reduce their MGA by 30%.  That would still put their monthly burn rate at   mga 57 million + 23 million interest expense + 229 million ships operations or a total 309 million per month burn rate in addition to their current liabilities.  So if one gives them the benefit of doubt and assumes that their lines of credit are fully intact and that they do not need to use them to cover current liabilities then they would still only have a maximum of 5 months.

 

Basically if they can get back to full operation in 3 months they might be fine.  Longer than 6 they are toast.

 

But load up on the stock at this price, after all you feel that they are just fine with plenty of borrowing power.

Edited March 20, 2020 by npcl

[npcl]

32 minutes ago, njhorseman said:

I have no idea where you're getting that number from. Per the consolidated balance sheet on page F-6 of the NCLH 10-K filed Feb 27, 2020, the corporation had about 253 million in cash on hand as of December 31, 2019.

 

You don't even have to go back to the 10-K to find the balance sheet. You can find it in post 88 of this thread .

njhorseman - sorry to hear about the loss of your friends.

[npcl]

13 minutes ago, sfaaa said:

Bailing out cruise industry is all about business. 

In this case the business is what is best for the country, as in american jobs, american business and american suppliers.  The best deal that the cruise lines can hope for will comes with substantial strings.  Based upon discussions those strings will probably include cutting executive compensation for around 450k per year max, eliminating stock buy backs, giving the government an equity position for any money received (dilution of existing share holders), elimination of dividends if any, etc.  As well as potentially some specific to the cruise industry. Will be see how the industry reacts. If they take it, it will clearly mean they had no other choice.  

[MadManOfBethesda]

On 3/18/2020 at 2:44 PM, em-sk said:

 

It becomes a problem for the credit card companies.  You put in a claim that you did not receive the goods ordered and billed to your credit card.  The credit card company does a charge back against NCL.   If there is money or not in the NCL bank account is a not your problem at that point.  

 

 

That's absolutely correct.

 

On 3/18/2020 at 2:49 PM, njhorseman said:

If a company goes into bankruptcy, either being restructured or liquidated you are going to be an unsecured creditor waiting on line...and you're going to be far down the queue. The credit card companies should not be legally on the hook for that money because the bankruptcy and the order of who gets paid and how much is under the control of the court.

 

No, em-sk is correct, and I have personal experience to back it up.  I had a fully-paid-for cruise booked on Renaissance when they went under shortly after 9/11.  At first, I thought I would have to put in a claim with my insurance company to get my money back, but it was refunded directly by American Express for the exact reason noted by em-sk.

[Always Cruising]

Isn't there usually a 3 month window from date of credit charge to do a charge back?  If not, we have a chance at a refund.  But if that date is adhered to, most of us charged with our credit cards much earlier than 3 months (or 90 days) ago. 

[tallnthensome]

I just cancelled my 12 day to Alaska on the Sun for August. Between Seattle being a major covid site, the cruise being cancelled in general, a possible quarantine, Canada closed at least until July, and the possibility of an NCL bankruptcy left me no choice . I was still outside the 120 policy so I figured I’d get this weighing decision of my shoulders . Wanted a refund and it took all of two minutes over the phone. I was sailing with my 2 young daughters and not taking any chances. If this drags out, and I believe it will, the lines are in real trouble. I didn’t want NCL holding/taking 5K from me. 

[npcl]

1 hour ago, tallnthensome said:

I just cancelled my 12 day to Alaska on the Sun for August. Between Seattle being a major covid site, the cruise being cancelled in general, a possible quarantine, Canada closed at least until July, and the possibility of an NCL bankruptcy left me no choice . I was still outside the 120 policy so I figured I’d get this weighing decision of my shoulders . Wanted a refund and it took all of two minutes over the phone. I was sailing with my 2 young daughters and not taking any chances. If this drags out, and I believe it will, the lines are in real trouble. I didn’t want NCL holding/taking 5K from me. 

After all if things clear up and it all becomes well, you can always book again

[mnsweeps]

5 hours ago, tallnthensome said:

I just cancelled my 12 day to Alaska on the Sun for August. Between Seattle being a major covid site, the cruise being cancelled in general, a possible quarantine, Canada closed at least until July, and the possibility of an NCL bankruptcy left me no choice . I was still outside the 120 policy so I figured I’d get this weighing decision of my shoulders . Wanted a refund and it took all of two minutes over the phone. I was sailing with my 2 young daughters and not taking any chances. If this drags out, and I believe it will, the lines are in real trouble. I didn’t want NCL holding/taking 5K from me. 

when did NCL say you would credit back on your CC? I cancelled on Mar 6 and still don't see credit on my Amex/Visa.

[ryanpatricksmom]

5 hours ago, mnsweeps said:

when did NCL say you would credit back on your CC? I cancelled on Mar 6 and still don't see credit on my Amex/Visa.

Just before this all started I paid in full for a B2B Transatlantic/ Mediterranean cruise next year.  I needed the miles in time to book the airfare at a reasonable rate (we have to fly first class because of DH's health issues, not respiratory thank God). As things unfolded I realized that traveling with him overseas has too many potential complications....if I had to come home unexpectedly I could cram into any seat, he could not, nor could he tolerate unexpected travel delays in the airports.  Obviously, I chose to cancel those trips.  It took about a week for both to be credited to my Amex.

 

I also prepaid for a NE/Canada cruise in September which I'm leaving on the books for now.  I'm confident enough that it's far enough away that it may still happen, but close enough that NCL would still be solvent.  I will have FCC from my April  cruise that was cancelled to apply and use up , plus  my air travel involved a companion certificate that I would lose if I cancel. I'm not particularly confident about the other 4 cruise next deposits that I'm currently holding, but I'm taking a gamble on the rest at this point.

[tallnthensome]

5 hours ago, mnsweeps said:

when did NCL say you would credit back on your CC? I cancelled on Mar 6 and still don't see credit on my Amex/Visa.

7-10 business days .... I have it coming back to my local bank debit MasterCard so I don’t if that makes any difference versus a big bank credit card. Time will tell but I would bet more than 10 days regardless.  

[TrumpyNor]

On 3/19/2020 at 12:28 PM, blcruising said:

 

Take the cash. Give them 21 days to issue the refund, then open a dispute with your credit card company if they are dragging their feet. That's what I did with my recently cancelled Norwegian Air flight from Rome next month, unrelated to Norwegian Cruise lines. However, I gave them seven days....no response...called Visa and they were very kind about opening a dispute for my cancelled flight.

 

No one is booking cruises. Everyone at NCL can be devoted to issuing timely, prompt refunds to their customers. They are even reported to be cutting back to a four day work week.

I just reread the press release from NCL regarding the optional cash refund of cancelled cruises between March 13th and April 11th, and realized that it actually states that 

"For guests who wish to not avail themselves of the 125% future cruise credit, a 100%

refund of the fare paid will be reimbursed to the original form of payment within 90 days of guests’ request. "

https://www.ncl.com/fr/en/press-releases/norwegian-cruise-line-holdings-announces-voluntary-suspension-of-voyages

 

And unfortunately a lot can happen during 90 days - both good AND bad....

Edited March 21, 2020 by TrumpyNor

[luv2kroooz]

6 minutes ago, TrumpyNor said:

I just reread the press release from NCL regarding the optional cash refund of cancelled cruises between March 13th and April 11th, and realized that it actually states that 

"For guests who wish to not avail themselves of the 125% future cruise credit, a 100%

refund of the fare paid will be reimbursed to the original form of payment within 90 days of guests’ request. "

https://www.ncl.com/fr/en/press-releases/norwegian-cruise-line-holdings-announces-voluntary-suspension-of-voyages

 

And unfortunately a lot can happen during 90 days - both good AND bad....

But there is no need to wait 90 days. A 90 day time period to issue a refund to a credit card is unheard of and purely arbitrary. No one is booking cruises so they can devote 100% of their labor force to issuing refunds. They are effectively treating their customers like banks. It's also the reason why they have not cancelled April sailings. Everyone is short on cash these days, including their customers. Offers of inflated gift certificates are no value to people that need cash now. Delaying refunds owed to passengers is also in poor taste.

 

And....they just create more work for themselves by requiring people to call in or fill out forms if they want $$. All they had to do was keep it simple. If they cancel a cruise, a refund is automatically issued to the card on file. No forms, no FCC calculations, no delays.

[bmwman]

On 3/18/2020 at 6:54 PM, Lionkingrichard said:

Cruzely has a good read on income and profits for the big 3.

 

In reads NCL makes 2.6 million per day(2018) in profits.

 

For this month, subtract fuel, food, booze and many others cost with each sailings. We think they are paying normal wages to all crew members, so don't subtract that. 

 

How much PROFIT are they losing this month? 30-45 Million?

 

It hurts, but not bankruptcy!

 but you have actually forgotten lost on board revenue!!

[bmwman]

On 3/20/2020 at 1:38 PM, Lionkingrichard said:

Yes and read the 10K. They refinance it at lower interest rates and save money.

Doubt it - there will be few lenders prepared to finance this with the new debt for Leonardo class. Or as I have said on another thread wave goodbye to the Leonardo class for  a few years or maybe another Bliss/Encore instead. They will NOT have the six new ships slated and that is absolutely certain now -read their accounts debt ridden and need to reduce. Sell all Jewel class Ships?

[bmwman]

On 3/18/2020 at 9:51 PM, BirdTravels said:

While they are not "going away", bankruptcy is an easy way to reset at your expense. 

 

We unfortunately have one Haven booking (normally we have 2 or 3 cruises booked for the next few months, but fortunately had not got around to booking our year's worth of cruises yet). We consider our one Haven booking a write off at this point. 

Again so much sense - well said . 

 

Lets see if UK credit card allow NCL bookings - acid test. If they suspect anything they will pull credit cars as they ate liable!! We have VERY different credit rules here to US . We are fully protected with limits if you pay by credit card.

[SteveH2508]

3 hours ago, bmwman said:

Again so much sense - well said . 

 

Lets see if UK credit card allow NCL bookings - acid test. If they suspect anything they will pull credit cars as they ate liable!! We have VERY different credit rules here to US . We are fully protected with limits if you pay by credit card.

For UK pax info - S75 limits are between £100 and £30,000.

 

Out of curiosity - are you aware of any instance when CC companies have refused to deal with a company due to financial concerns? I certainly cannot think of one.

[bmwman]

40 minutes ago, SteveH2508 said:

For UK pax info - S75 limits are between £100 and £30,000.

 

Out of curiosity - are you aware of any instance when CC companies have refused to deal with a company due to financial concerns? I certainly cannot think of one.

Its not a  section 75 Claim. Under Section 75 of the Consumer Credit Act 1974, the credit card company is jointly and severally liable for any breach of contract or misrepresentation by the retailer or trader. As it may e an insolvency event it is not as far as I am aware breach of contract. But I am not a lawyer!

 

Its a claim for non provision of service.

 

Absolutely yes I have . (but not on this scale) Especially where they are selling future vouchers (cruise next). 

 

Will it happen in this case - not expected  but if the CC  companies get cold feet with a large  company like NCL  then anything is possible 

Edited March 21, 2020 by bmwman