Royal Caribbean Cruises Ltd entered into a $2.2 billion 364-day secured term loan fac

[suzyluvs2cruise]

Royal Caribbean Cruises Ltd (NYSE: RCL) today announced that it has entered into a $2.2 billion 364-day secured term loan facility, further enhancing the company's liquidity position. 

 

Royal Caribbean Borrows $2.2 billion

[Jimbo]

Whats this mean for the stock in the next 7 days? 

[yogimax]

32 minutes ago, Jimbo said:

Whats this mean for the stock in the next 7 days? 

Don't try to figure out where the stock will be in seven days.  No one can do that and all it will do is cause you stress.

 

If owning this stock or any stock is stressful or causes you to lose sleep, get out of the market and put your investments in a money market account.

 

We're in totally unchartered territory and will remain there until COVID-19 dies out or a successful vaccine is developed. 

[Jimbo]

13 minutes ago, yogimax said:

Don't try to figure out where the stock will be in seven days.  No one can do that and all it will do is cause you stress.

 

If owning this stock or any stock is stressful or causes you to lose sleep, get out of the market and put your investments in a money market account.

 

We're in totally unchartered territory and will remain there until COVID-19 dies out or a successful vaccine is developed. 

Something is causing the change today though, up almost $2.50 today, when most other stocks are down...

Edited March 23, 2020 by Jimbo

[yogimax]

4 minutes ago, Jimbo said:

Something is causing the change today though, up almost $2.50 today, when most other stocks are down...

This one is easy to figure out.  They announced today that they had borrowed 2.2 billion dollars from their loan facility.  This increase in liquidity makes it more likely they will be able to pay their bills for the next few months.  Yes, they will be paying interest on this amount.

 

Now look down the road. 

 

What is the current sentiment among the general public toward cruising? 

 

Even after they resume sailings in (pick month), (pick year), how long will it take them before ships begin sailing at more than "break even?"

 

The general sentiment is now negative toward cruising.  When will it again turn positive?

 

Short term is easy to predict... no income, continuing expenses

Long term... who knows, but the industry is general looks mighty weak.

[coaster]

Not sure what this part means  - ' In addition, the company has committed financing for all of its new ships on order.'  Does this mean they are not going to cancel any of their new ship orders?

[Plum Happy]

16 minutes ago, coaster said:

Not sure what this part means  - ' In addition, the company has committed financing for all of its new ships on order.'  Does this mean they are not going to cancel any of their new ship orders?

I believe that it means that the ships that they have on order throughout the fleet or in process are secured to completion.

[Baron Barracuda]

30 minutes ago, coaster said:

Not sure what this part means  - ' In addition, the company has committed financing for all of its new ships on order.'  Does this mean they are not going to cancel any of their new ship orders?

It basically means RCL has funding in place to pay for all those new ships currently on order.  With cruise lines and shipyards currently shut down by Corona delivery dates will be pushed back substantially.

[Biker19]

1 minute ago, Baron Barracuda said:

With cruise lines and shipyards currently shut down by Corona delivery dates will be pushed back substantially.

I don't think there's been a shutdown at Meyer building Odyssey, nor at Chantiers building Wonder.

[darthvadrouw]

13 minutes ago, Biker19 said:

I don't think there's been a shutdown at Meyer building Odyssey, nor at Chantiers building Wonder.

 

Chantiers de l'Atlantique closed on Friday.
They plan on reopening on April 5th at the earliest.

Edited March 23, 2020 by darthvadrouw

[grandgeezer]

All this means is they probably won’t have to file bankruptcy,  at least for a year.

It is a loan that has a 364 term. $2.2 billion plus interest is a lot of money to pay back along with their other obligations. If this crisis stretches out for several more months, where’s the money coming from? If they default, who in their right mind would lend them another cent? Time will tell.

[Ocean Boy]

2 hours ago, Biker19 said:

I don't think there's been a shutdown at Meyer building Odyssey, nor at Chantiers building Wonder.

Do you think it is it better for RCI to have the shipyard open, working, and delivering a ship that might then sit idle or have the yard closed and delaying the turn over of a ship that might then be delivered at a time when demand may have improved?  

[bouhunter]

2 hours ago, yogimax said:

 

 

Now look down the road. 

 

What is the current sentiment among the general public toward cruising? 

 

Even after they resume sailings in (pick month), (pick year), how long will it take them before ships begin sailing at more than "break even?"

 

The general sentiment is now negative toward cruising.  When will it again turn positive?

 

Short term is easy to predict... no income, continuing expenses

Long term... who knows, but the industry is general looks mighty weak.

Good points.  And there are other factors once sailings start that won't help cruiselines:

1.  Higher unemployment reduces customers

2.  Losses in stock funds(retirement accounts) will affect customers ability/willingness to cruise.

[Biker19]

4 minutes ago, Ocean Boy said:

Do you think it is it better for RCI to have the shipyard open, working, and delivering a ship that might then sit idle or have the yard closed and delaying the turn over of a ship that might then be delivered at a time when demand may have improved?  

Not sure RCI has much say when the ship comes off the assembly line - if they can work safely, I'm assuming the yard will stay open. If Odyssey can't sail by the time she is supposed to be delivered, we have much bigger problems.

[Ocean Boy]

Just now, Biker19 said:

Not sure RCI has much say when the ship comes off the assembly line - if they can work safely, I'm assuming the yard will stay open. If Odyssey can't sail by the time she is supposed to be delivered, we have much bigger problems.

I agree. But I think it might be in RCI's best interest to have the delivery of the ship delayed as long as possible. Once cruising restarts I think they are going to have issues, at least for awhile, finding enough demand to fill up available berths at a price point that makes much sense. With mass shutdown of businesses I don't think people are going to be feeling very positive from an economic standpoint for awhile. I think folks well be happy to get back to work not looking for a cruise to go out and spend disposable income on. 

[NateUpNorth]

37 minutes ago, Ocean Boy said:

I agree. But I think it might be in RCI's best interest to have the delivery of the ship delayed as long as possible. Once cruising restarts I think they are going to have issues, at least for awhile, finding enough demand to fill up available berths at a price point that makes much sense. With mass shutdown of businesses I don't think people are going to be feeling very positive from an economic standpoint for awhile. I think folks well be happy to get back to work not looking for a cruise to go out and spend disposable income on. 

 

A price point that makes sense might just be cover costs, carry interest and make dividend payouts...... which may result in prices you can’t beat and filling cabins..... probably too optimistic with that thought though.....

[Ocean Boy]

11 minutes ago, NateUpNorth said:

 

A price point that makes sense might just be cover costs, carry interest and make dividend payouts...... which may result in prices you can’t beat and filling cabins..... probably too optimistic with that thought though.....

I agree with you on price point. But I still think it will take awhile for the average person who has been out of work to get to the point where vacations and shopping for cruises will be foremost on their minds. And when they do start looking for vacations cruising may not be high on their list no matter how good the price. Diamond Princess was not your typical "another cruise ship has a noro virus" story. Visions of quarantined ships are going to take time to fade.

 

Just my thoughts. None of really knows how this all plays out including the cruise lines themselves. I do think RCI will have a renewed respect for its upper level C&A members though, at least for awhile. Those are the people who will be back on the ships first. I bet RCI can't wait to see an over crowded Diamond Lounge in need of an overflow area.

[dani negreanu]

41 minutes ago, Ocean Boy said:

1) Diamond Princess was not your typical "another cruise ship has a noro virus" story. Visions of quarantined ships are going to take time to fade.

 

2) I do think RCI will have a renewed respect for its upper level C&A members though, at least for awhile. Those are the people who will be back on the ships first. I bet RCI can't wait to see an over crowded Diamond Lounge in need of an overflow area.

 

+ Like on both counts.

[npcl]

4 hours ago, Baron Barracuda said:

It basically means RCL has funding in place to pay for all those new ships currently on order.  With cruise lines and shipyards currently shut down by Corona delivery dates will be pushed back substantially.

The new ships are generally funded by lines of credit from the countries where the ships are being built

[npcl]

I posted this in another stream but it is relevant here

 

 

 

The loan terms are rather interesting.  It reads to me as if they pledged Celebrity as Collateral for the loan.

From the 8-K filing.  Somewhat surprising in that they are not getting the loan on the ships but also on the 100% of their equity interests in Celebrity.  Seems are lot for a 2.2 billion 364 day loan. It is a little unclear if they might be pledging another ship owning line (of which there are Azamara and Silversea as well as the TUI joint venture), but if so you would expect them to list the line.

 

 

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/884887/000110465920037377/tm2012810-1_8k.htm

 

 

On March 23, 2020 (the “Funding Date”), Royal Caribbean Cruises Ltd. (the “Company,” “we,” “our” and “us”) borrowed $2.2 billion pursuant to a 364-day senior secured term loan agreement (the “Loan Agreement”) with Morgan Stanley Senior Funding, Inc., as the administrative agent and collateral agent and the other lenders party thereto. The loans under the Loan Agreement (the “Loans”) will mature on the date that is 364 days after the Funding Date and such maturity date may be extended at our option an additional 364 days subject to customary conditions, including the payment of a 1.00% extension fee.

 

The Company’s obligations under the Loan Agreement are guaranteed by our wholly-owned subsidiaries, Celebrity Cruises Holdings Inc., Celebrity Cruises Inc. and certain of our wholly-owned vessel-owning subsidiaries, and will be secured by our trademarks and a pledge of 100% of the equity interests of certain of our wholly-owned vessel-owning subsidiaries. We will also use commercially reasonable efforts to deliver a mortgage in favor of the collateral agent over each of the vessels owned by such vessel-owning subsidiaries.

 

The proceeds of the Loan Agreement will be used for working capital and other general corporate purposes. Interest accrues at LIBOR plus a margin of 2.25% which increases to 2.50% and 2.75%, 180 days and 365 days, respectively, after the Funding Date. In addition, we will be required to pay a duration fee in an amount equal to 0.25% of the aggregate principal amount of the Loans outstanding every 60 days.

 

[Tall-Cruiser]

23 minutes ago, npcl said:

It reads to me as if they pledged Celebrity as Collateral for the loan.

 

The way I read it is, The RCCL loan is guaranteed by Celebrity Cruise Holdings Inc., Celebrity Cruises Inc. and certain wholly-owned vessel-owning subsidiaries of RCCL. So if they (RCCL) defaults the guarantors listed above become responsible. In the next section you reference, it talks about how it will be secured and the assets that would make up such secured loan including a mortgage of the vessels. Typically, all the vessels in the fleet have an appraised FMV that may go up or down depending on recent upgrades and drydock. Such valuation may be used to derive the $$ of the collateral pool subject to the Mortgage. Some lenders may allow 100% of the collateral value but, in most ship financing its less than 100%. 

[Tall-Cruiser]

5 hours ago, Baron Barracuda said:

It basically means RCL has funding in place to pay for all those new ships currently on order.  With cruise lines and shipyards currently shut down by Corona delivery dates will be pushed back substantially.

 

And they are most likely paying a Commitment Fees for having lenders secure and make such funding available. 

[mugtech]

Good to know I should be getting my refunds.

[npcl]

43 minutes ago, Tall-Cruiser said:

 

The way I read it is, The RCCL loan is guaranteed by Celebrity Cruise Holdings Inc., Celebrity Cruises Inc. and certain wholly-owned vessel-owning subsidiaries of RCCL. So if they (RCCL) defaults the guarantors listed above become responsible. In the next section you reference, it talks about how it will be secured and the assets that would make up such secured loan including a mortgage of the vessels. Typically, all the vessels in the fleet have an appraised FMV that may go up or down depending on recent upgrades and drydock. Such valuation may be used to derive the $$ of the collateral pool subject to the Mortgage. Some lenders may allow 100% of the collateral value but, in most ship financing its less than 100%. 

That would make sense since they say equity of instead of equity in  the former meaning the equity the subsidiary holds, as opposed to the parent companies equity in. Missed that.

[CruiseZog]

To me, the headline is that they do not face a short term cash crunch.