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Mrdodgy

So you want to know why NCL were so late in cancellation

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Posted (edited)

Good day all 

 

I invite you to read (if you are that way inclined)  the SEC filing of yesterday - The same day they issued the cancellations. Most of the agreements were signed as of yesterday.

 

For the record they have had to ask for a debt holiday to raise $386m liquidity. There are other agreements and they have had to release most of their financing documents and this is a debt laden company now beyond belief. I have not read them all but the documents lay bare NCL debt and repayments.

 

I doubt very much that project Leonardo will proceed as planned as no one will lend them the money now.

 

They have also withdrawn their earnings statements made on Feb 2020 

 

Will they go Chapter 7 or 11 less likely -  will they ever be the same again as they try and recoup debt - who knows 

 

 

 

 

Edited by Mrdodgy

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11 hours ago, Mrdodgy said:

Good day all 

 

I invite you to read (if you are that way inclined)  the SEC filing of yesterday - The same day they issued the cancellations. Most of the agreements were signed as of yesterday.

 

For the record they have had to ask for a debt holiday to raise $386m liquidity. There are other agreements and they have had to release most of their financing documents and this is a debt laden company now beyond belief. I have not read them all but the documents lay bare NCL debt and repayments.

 

I doubt very much that project Leonardo will proceed as planned as no one will lend them the money now.

 

They have also withdrawn their earnings statements made on Feb 2020 

 

Will they go Chapter 7 or 11 less likely -  will they ever be the same again as they try and recoup debt - who knows 

 

 

 

 

 

The liquidity was provided by Hermes, Germany's official export credit agency, to provide relief for borrowers during the current COVID-19 pandemic.  It's Germany's parallel to US Covid Stimulus arrangements (as Germany has ship builders for each).  NCLH was provided $386M and RCL $250M. through April 2021.

 

https://www.seatrade-cruise.com/news/nclh-rcl-boost-liquidity-debt-holidays-german-built-ships

 

NCL has the least debt burden for the next 12-months of CCL and RCL and NCL is no more 'debt laden than CCL (really heavy new debt 11%+) and RCL.

 

I have read them all.

 

They won't be "going Chapter 7" (i.e., liquidation).  LOL.

 

They are not likely to enter Chapter 11 with these liquidity programs, and customers choosing FCC versus refund.  Their debt arrangements pre-Covid are really at attractive rates and terms.  Post-Covid, CCL's debt terms are very, very expensive.

 

Agree, we'll see.

 

 

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1 hour ago, Formula280SS said:

 

The liquidity was provided by Hermes, Germany's official export credit agency, to provide relief for borrowers during the current COVID-19 pandemic.  It's Germany's parallel to US Covid Stimulus arrangements (as Germany has ship builders for each).  NCLH was provided $386M and RCL $250M. through April 2021.

 

https://www.seatrade-cruise.com/news/nclh-rcl-boost-liquidity-debt-holidays-german-built-ships

 

NCL has the least debt burden for the next 12-months of CCL and RCL and NCL is no more 'debt laden than CCL (really heavy new debt 11%+) and RCL.

 

I have read them all.

 

They won't be "going Chapter 7" (i.e., liquidation).  LOL.

 

They are not likely to enter Chapter 11 with these liquidity programs, and customers choosing FCC versus refund.  Their debt arrangements pre-Covid are really at attractive rates and terms.  Post-Covid, CCL's debt terms are very, very expensive.

 

Agree, we'll see.

 

 

The rate NCL is going to be paying as  is huge.  I do not think we will agree on the balance sheet analysis as I believe NCL is too far geared. Further thy have got no cash reserves

 

your assertion about chapter 7 is agreed but I still feel that Chapter 11 is entirely possible if the industry does not pick up  or the lock down continues for many more months.

 

The moving of the debt is great but it still has to be repaid.

 

As you say time will tell,

 

Any thoughts on Leonardo project?

 

 

 

 

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I’m not worried about anything changing even if they were to file bankruptcy. Lots of companies file bankruptcy and then continue business as usual. You wouldn’t even know it if you hadn’t heard it on the news. I’m not saying I think they will file - I don’t know. But what I do know is bankruptcy and out of business aren’t the same thing, and I’m not worried. 

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3 minutes ago, GlamorousGirl said:

I’m not worried about anything changing even if they were to file bankruptcy. Lots of companies file bankruptcy and then continue business as usual. You wouldn’t even know it if you hadn’t heard it on the news. I’m not saying I think they will file - I don’t know. But what I do know is bankruptcy and out of business aren’t the same thing, and I’m not worried. 

Chapter 11 could mean that FCC's are worthless, something to consider for those who have them.

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I doubt the FCC's old be worthless. They would be alienating too many people depending on them. NCL would lose ALL credibility.

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28 minutes ago, deliver42 said:

I doubt the FCC's old be worthless. They would be alienating too many people depending on them. NCL would lose ALL credibility.

Noting that NCL does have a large, newer fleet that will work for and against the company in case of filing chapter 11; those ships won’t be abandoned but carry a lot of debt still because of their payments due.  That would be addressed first prior to any FCC cancellations; new terms and longer payment plans for those ships would likely be the course of action determined in a filing.  Any new ships I believe will be on hold for years to come. It is interesting that Germany “bailed out” NCL with their loan, as Project Leonardo ships were not scheduled to be built at Meyer Werftt 

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NCL just sent me a new, two day only sale for Latitudes members, for cruises sailing beginning on July 11.  Think I'll continue to hang personally onto my money though.  

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7 hours ago, mugtech said:

Chapter 11 could mean that FCC's are worthless, something to consider for those who have them.

 

That could be likely.  However,  "if" the Bankruptcy Court doesn't include them as a "customer obligations" in the first day motions to treat certain unsecured creditors that could be different.  There really isn't a lot of large cruise line precedent to look at.

 

https://www.sec.gov/Archives/edgar/data/946842/000089968111000145/ambassadors-10k_042111.htm

 

 

PART I
 
Item 1. Business
 
Overview
 
 
Ambassadors International, Inc. (the “Company”) continues to operate the international cruise operations of its subsidiary, Windstar Sail Cruises Limited (“Windstar Cruises”). Windstar Cruises maintains a fleet of three internationally-flagged luxury yachts that provide travel and cruise opportunities to treasured destinations with sailings in the Caribbean, Europe, the Americas and the Greek Isles.
 
The Company’s principal executive office is located at 2101 4th Avenue Suite 210 Seattle Washington, 98121 and the telephone number is (206) 292-9606.
 
 
 Recent Events
 
Chapter 11 Proceedings
 
On April 1, 2011 (the “Petition Date”), the Company and certain of its direct and indirect domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking relief under the provisions of chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). These chapter 11 cases (collectively, the “Chapter 11 Case”) are being jointly administered.  The Company’s subsidiaries organized outside the United States are not Debtors in the Chapter 11 Case, nor are they parties to any insolvency or reorganization proceedings in their home jurisdictions.
 
The Debtors continue to operate as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.   As debtors-in-possession, the Debtors are authorized to continue to operate as ongoing businesses, and may pay all debts and honor all obligations arising in the ordinary course of their businesses after the Petition Date. However, the Debtors may not pay creditors on account of obligations arising before the Petition Date or engage in transactions outside the ordinary course of business without approval of the Bankruptcy Court, after notice and an opportunity for a hearing.
 
Under the Bankruptcy Code, actions to collect pre-petition indebtedness, as well as most litigation pending against the Debtors, are stayed. Other pre-petition contractual obligations against the Debtors generally may not be enforced.
 
The Debtors have received approval from the Bankruptcy Court of their “first day” motions, which were filed as part of the Chapter 11 Case. Among other “first day” relief, the Debtors received approval to continue wage and salary payments and other benefits to employees as well as certain related pre-petition obligations; to continue to honor customer programs as well as certain related pre-petition customer obligations; and to pay certain pre-petition trade claims held by critical vendors. The Debtors intend to continue to pay vendors and suppliers in the ordinary course of business for goods and services delivered post-petition.

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Posted (edited)
2 hours ago, Jim The Lizard said:

It is interesting that Germany “bailed out” NCL with their loan, as Project Leonardo ships were not scheduled to be built at Meyer Werftt 

The debt holiday was granted for principal and interest payments due on six ships already in service that were built in Germany:  Bilss, Encore, Breakaway, Getaway, Escape and Joy.It has nothing to do with Project Leonardo.

Edited by njhorseman

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3 hours ago, deliver42 said:

I doubt the FCC's old be worthless. They would be alienating too many people depending on them. NCL would lose ALL credibility.

None of the above (alienating, credibility) would even be a consideration in a bankruptcy filing. 

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10 hours ago, BirdTravels said:

None of the above (alienating, credibility) would even be a consideration in a bankruptcy filing. 

Agreed 

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13 hours ago, njhorseman said:

The debt holiday was granted for principal and interest payments due on six ships already in service that were built in Germany:  Bilss, Encore, Breakaway, Getaway, Escape and Joy.It has nothing to do with Project Leonardo.

I understand.  But it was still noteworthy that German shipyards were basically extending the debt requirements for pships already built with no plans for future NCL builds.  RCCL has a ship at Meyer right now under construction. It’s good business that Germany allowed basically an extension of the payment terms; however, there is no future business at Meyer for NCL. That was the reason I found it interesting. 

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5 hours ago, Jim The Lizard said:

I understand.  But it was still noteworthy that German shipyards were basically extending the debt requirements for pships already built with no plans for future NCL builds.  RCCL has a ship at Meyer right now under construction. It’s good business that Germany allowed basically an extension of the payment terms; however, there is no future business at Meyer for NCL. That was the reason I found it interesting. 

They granted the debt holiday in order to lessen the likelihood of an NCLH bankruptcy, which might leave them as the owner of six ships on which they would have little chance of recovering anywhere near the full amount of the money that was loaned. It's a reasonable business decision.

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The grant also could have a clause that x amount of new builds be done in Germany for NCL to receive the debt holiday.

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Posted (edited)
48 minutes ago, phillyguy31 said:

The grant also could have a clause that x amount of new builds be done in Germany for NCL to receive the debt holiday.

I don't see a word about anything like that in the 8-K . Of course I haven't read every word of all the attachments but something like seems to be material enough that it would have to appear in the body oy 8-K, not just the exhibits attached to the 8-K. If you care to read it for yourself, here it is:

http://www.nclhltdinvestor.com/node/12816/html#tm2016615d1_ex10-1.htm

Edited by njhorseman

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Thanks, couldn't read it all either, I agree you would think it would be obvious. 

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Thank you do for for all  your comments.

 

One area no one has discussed is this - who are more important shareholders debt holders or passengers. I suggest chicken and egg here. Get the passenger pricing wrong they fail. Do not deliver shareholder value - they fail. Fail to meet the new debt repayments - they fail

 

They are leaving things as late as possible as they are walking a tightrope and what lies below is an abyss. I can assure you that there will be vultures circling. The hulls of Breakaway and B+ in a forced sale are commodities and the Jewel class ships perfect for a smaller line. May have issues selling older ships and Epic but who knows. Who are the vultures I can only guess.

 

The ships are assets pure and simple and for some us holiday venues - Liquidators do not care they are saleable assets!

 

Food for thought - happy to hear any arguments 

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1 hour ago, brovol said:

A lot of talking out of school on this thread.  Ill just say that.

Smartest quote so far.  No one is going to file for Chapter 7 or 11.  No one is going to buy ships that only the cruise industry can run, least of all, any other cruise line as they’re in worse shape than NCL.

 

They will subsist until they can sail again (I’m taking bets at late Q3...early Q4).  Debt service is likely NCL friendly given the state of the economy and the low rates already in process before COVID 19.

 

I have no facts to state this, but it’s my hope that at least DelRio is shown the door as this keeps evolving.

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1 hour ago, brovol said:

A lot of talking out of school on this thread.  Ill just say that.

19 minutes ago, graphicguy said:

Smartest quote so far.  No one is going to file for Chapter 7 or 11.  

 

I have no facts to state this

 

Well, with over a decade of public company Chapter 11's, I guess I'm "out of school."

 

I don't believe Ch-7 is at all possible.

 

Unless this C-19 re-emerges and there is no vaccine or therapeutics, it's over for a lot more than cruise lines.

 

If so ~

 

NCL working with GS "is not good."  Hope I'm wrong.

 

An equity raise is so preferred (for non-stockholders) than more debt @ CCL rates of 11%+

 

If Ch-11, IMO it would have to be a pre-pack; the existing debt terms and conditions are too valuable to give up. 

 

If the oil hadn't tanked, I could see Middle East Sovereign funds; same with China sans oil.

 

Also, not honoring the Customer Deposits in BK would be a death knell.

 

So, 'talking out of school should ELABORATE; educate us with the "in school talk."

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41 minutes ago, cruisingator2 said:

Looks like NCL is getting ready to move ships to cold layup. I suspect the same from Carnival, RCI and MSC.

 

https://www.seatrade-cruise.com/news/nclh-sees-q1-and-2020-loss-bookings-still-coming-half-canceled-voyages-seek-refunds

 

So 50% took the cash (including me)

I have a feeling I will get an email from NCL when getting close to the deadline of the 90 days, saying that I would get an additional 25% FCC If i make a booking instead of taking my cash.

 

It would be a smart move if they did.

 

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19 minutes ago, z4oslo said:

 

So 50% took the cash (including me)

I have a feeling I will get an email from NCL when getting close to the deadline of the 90 days, saying that I would get an additional 25% FCC If i make a booking instead of taking my cash.

 

It would be a smart move if they did.

 

Smart move for them, smart move for you to take the refund.

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On 4/26/2020 at 7:55 AM, deliver42 said:

I doubt the FCC's old be worthless. They would be alienating too many people depending on them. NCL would lose ALL credibility.

I think the FCCs have a better shot then the refunds in Chapter 11.  Refunds are people walking away.  FCC are for people who want to stay cruising.  I think the best case is to sweeten the pot to convert as many people to FCC.

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11 hours ago, brovol said:

A lot of talking out of school on this thread.  Ill just say that.

 

9 hours ago, graphicguy said:

Smartest quote so far.  No one is going to file for Chapter 7 or 11.  No one is going to buy ships that only the cruise industry can run, least of all, any other cruise line as they’re in worse shape than NCL.

 

They will subsist until they can sail again (I’m taking bets at late Q3...early Q4).  Debt service is likely NCL friendly given the state of the economy and the low rates already in process before COVID 19.

 

I have no facts to state this, but it’s my hope that at least DelRio is shown the door as this keeps evolving.

Ok that's fine but how do you subsist with no money and  shares that are worthless. Chapter 11 does not mean selling ships it means debt refinancing.  

 

"No one is going to buy ships that only the cruise industry can run, least of all, any other cruise line as they’re in worse shape than NCL" then why take security over them. No one takes security over an asset it can not sell.  

 

There are plenty of ships about to be built and if (and it is hypothetical)  NCL were to go a lot of lines will think that a second refurbished hull is cheaper than a new ship and just as desirable. 

 

As to FDR who knows.

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