Carnival Financal Trouble If Not Cruising Soon

[embarkation75]

The quote from the 2nd bullet toward the middle of the Carnival financial release shows how close Carnival is getting to not being solvent. Sadly it shows how thinking cruising can just wait until next spring or later to return with no impacts is naive as going into bankruptcy/reorganization will create many consequences, especially when they've used most of their ships as collateral.

 

"As a result of the COVID-19 outbreak, we have paused our guest cruise operations, and if we are unable to re-commence normal operations in the near-term, we may be out of compliance with a maintenance covenant in certain of our debt facilities as of May 31, 2021"

 

https://www.prnewswire.com/news-releases/carnival-corporation--plc-announces-an-equity-offering-and-repurchase-of-convertible-notes-301107263.html

[Saint Greg]

Seems like they have more ships they can sell. Cruise lines they can sell. They haven't started taking deposits for west coast Radiance or unnamed new ship yet. They could do another cheers/cruise cash sale or an excursion sale.  It seems like there are a lot of ways to still generate cash. I won't get nervous until after NCL files.

[jimbo5544]

1 minute ago, Saint Greg said:

Seems like they have more ships they can sell. Cruise lines they can sell. They haven't started taking deposits for west coast Radiance or unnamed new ship yet. They could do another cheers/cruise cash sale or an excursion sale.  It seems like there are a lot of ways to still generate cash. I won't get nervous until after NCL files.

Bingo

Edited August 8, 2020 by jimbo5544

[TNcruising02]

Definitely tough times for the cruise industry.  I think the biggest issue is what to do with someone who has severe symptoms while on the ship.  Certain ports probably wouldn't want to take that person.  They would not be able to go on a plane.  The only thing I can think of is a hospital ship.  Get the person and their family off of the ship as quickly as possible.

 

If the virus isn't going away any time soon, people have to figure out ways to go on with their lives and businesses and assume the risks involved.  I am still hoping that better treatments will become available in the not too distant future.  That and vaccines.  Until then, I sure hope the cruise lines can hold out.  It's very sad what is happening.

Edited August 8, 2020 by TNcruising02

[CruiseHealing]

The fastest way back to cruising will involve COVID Quick Result tests. A test that can have a valid trustworthy result within 30 minutes or less.  All passengers and employees will be tested every time they board the ship.  At embarkation and returning from port testing would occur.  There are numerous companies working on these trustworthy tests including 3M/MIT and Sorrento Pharm (google their work).  Hopefully as these test are developed and commercialized we all can return back to the sea!

[chengkp75]

And, yet, the whole article is how Carnival is decreasing their debt load by nearly 50%.  While the dilution of shares is not good for the shareholders, it does create a very positive change to their operations, by cutting interest and principal payments in half.

[bury me at sea]

56 minutes ago, chengkp75 said:

And, yet, the whole article is how Carnival is decreasing their debt load by nearly 50%.  While the dilution of shares is not good for the shareholders, it does create a very positive change to their operations, by cutting interest and principal payments in half.

 

I agree.  It is effectively a reverse split for shareholders.

[jimbo5544]

Does imply they think it is a long game.  

[beachbum53]

2 hours ago, CruiseHealing said:

The fastest way back to cruising will involve COVID Quick Result tests. A test that can have a valid trustworthy result within 30 minutes or less.  All passengers and employees will be tested every time they board the ship.  At embarkation and returning from port testing would occur.  There are numerous companies working on these trustworthy tests including 3M/MIT and Sorrento Pharm (google their work).  Hopefully as these test are developed and commercialized we all can return back to the sea!

 

I'm not sure how reliable those quick results tests are. Too often there are false positives or false negatives. I for one wouldn't rely on a quick test. 

Edited August 8, 2020 by beachbum53

[BlerkOne]

1 hour ago, chengkp75 said:

And, yet, the whole article is how Carnival is decreasing their debt load by nearly 50%.  While the dilution of shares is not good for the shareholders, it does create a very positive change to their operations, by cutting interest and principal payments in half.

 

The majority of shares are held by institutions, including some that own some of the debt. The new shares will be snapped up by them.

[kona_wahine]

Until there is a good vaccine, life will not get back to normal.

[chengkp75]

1 minute ago, BlerkOne said:

 

The majority of shares are held by institutions, including some that own some of the debt. The new shares will be snapped up by them.

From what I read, the new shares are being offered only to the note holders to switch debt for equity.

[BlerkOne]

1 hour ago, chengkp75 said:

From what I read, the new shares are being offered only to the note holders to switch debt for equity.

 

Yes, but who bought the notes?

 

MIAMI, April 6, 2020 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE: CCL;NYSE: CUK), the world's largest leisure travel company, today announced that Carnival Corporation (the "Corporation") has closed its private offering to qualified institutional buyers of $1.95 billion aggregate principal amount of 5.75% convertible senior notes due 2023 (the .....

[BlerkOne]

1 hour ago, kona_wahine said:

Until there is a good vaccine, life will not get back to normal.

 

Don't plan on life getting back to normal, then.

[kona_wahine]

1 hour ago, BlerkOne said:

 

Don't plan on life getting back to normal, then.

Nah, it will happen. 

[PhillyFan33579]

10 minutes ago, kona_wahine said:

Nah, it will happen. 

What references, studies, etc. make you believe things will get back to normal?

[Moviela]

Public companies are required to make disclosures of significant events affecting their business. If I had a dollar for every time a S&P 500 company "may be out of compliance with a maintenance covenant" I would need a forklift to stack the cash in a warehouse. 

 

I am not sure how much new stock they are issuing in the debt for equity swap, but they do have a large amount of "treasury stock" that they purchased on the open market. Issuing that stock does not dilute shareholder equity.

[richfret]

The problem is that not only is Carnival in dire straits but several other corporations in the US and world wide.  Not only does Carnival have to survive but also the other major corporations or the problem just magnifies.  Sounds horrible because it is.  It sounds like the vaccine is the only solution but prompt distribution to all is not likely in 2021 so I see this as a very long term issue.  

[RWolver672]

On 8/8/2020 at 2:49 PM, Saint Greg said:

Seems like they have more ships they can sell. Cruise lines they can sell. They haven't started taking deposits for west coast Radiance or unnamed new ship yet. They could do another cheers/cruise cash sale or an excursion sale.  It seems like there are a lot of ways to still generate cash. I won't get nervous until after NCL files.

 

Who in their right mind would buy a ship or cruise line right now when ships can't sail and nobody knows for sure when they can set sail again.  As much as I'd like to be optimistic about the future of cruising,  I have my doubts.

 

[Saint Greg]

59 minutes ago, RWolver672 said:

 

Who in their right mind would buy a ship or cruise line right now when ships can't sail and nobody knows for sure when they can set sail again.  As much as I'd like to be optimistic about the future of cruising,  I have my doubts.

 

Well they just sold two ships right? They can sell more. You could just as easily say who in their right mind would buy carnival stock in a pandemic? Yet people do. Saudi Arabia bought 43 million shares. 
 

Are you just picking and choosing what in my post you want to talk about or are you going to say people won’t book the new ships when carnival puts them on the schedule?
 

Edited August 10, 2020 by Saint Greg

[RWolver672]

3 minutes ago, Saint Greg said:

Well they just sold two ships right? They can sell more. You could just as easily say who in their right mind would buy carnival stock in a pandemic? Yet people do. Saudi Arabia bought 43 million shares. 
 

 

If I were rich, which I'm not, the last thing I would do is invest in something with a bleak future.  Right now, cruising is on hold for who knows how long.

 

[BlerkOne]

6 hours ago, RWolver672 said:

 

Who in their right mind would buy a ship or cruise line right now when ships can't sail and nobody knows for sure when they can set sail again.  As much as I'd like to be optimistic about the future of cruising,  I have my doubts.

 

 

When you can buy them for pennies on the dollar. Carnival likely sold two Fantasy class ships to scrappers for less than $7 million each, or scrap value. They don't have to remain cruise ships. They could be floating hotels. Riverboat casinos. Storage units. You could likely scrap them later for what you paid for them - maybe more.

[BrentD]

This shouldn't really come as a surprise.  Also, May 2021 is an expected timeframe as well because not terribly long after we got into this cruising shutdown it was said that Carnival could survive into the 2nd quarter of next year without operating any cruises before things would be dire.

[Bgcruising]

On 8/8/2020 at 9:10 PM, PhillyFan33579 said:

What references, studies, etc. make you believe things will get back to normal?

 

How often did we sit around scared of the Spanish flu? 

 

It passed, this will too.

[Bgcruising]

On 8/10/2020 at 5:55 AM, RWolver672 said:

 

If I were rich, which I'm not, the last thing I would do is invest in something with a bleak future.  Right now, cruising is on hold for who knows how long.

 

 

If I were rich I'd buy my own boat and sail any time.