Carnival and P&O.

[Yorkypete]

Carnival have just taken out a £2 billion financing loan and put up 12 vessels as collateral. Anyone know if any of the twelve are P&O ships? Hopefully the collateral will not be needed.

 

[Harry Peterson]

5 minutes ago, Yorkypete said:

Carnival have just taken out a £2 billion financing loan and put up 12 vessels as collateral. Anyone know if any of the twelve are P&O ships? Hopefully the collateral will not be needed.

 

Not sure, but the FT says Carnival’s transferred 12 ships, most of which became operational in the last 2 years (total value $8.2bn) to a subsidiary which issued the bond using the ships as collateral.

A way of reducing interest costs. Makes sense, provided all goes well….

[majortom10]

1 hour ago, Harry Peterson said:

Not sure, but the FT says Carnival’s transferred 12 ships, most of which became operational in the last 2 years (total value $8.2bn) to a subsidiary which issued the bond using the ships as collateral.

A way of reducing interest costs. Makes sense, provided all goes well….

But if it doesnt could be the end of Carnival as we currently know it. Personally I cannot see Carnival through all this in its current position, either they will sell even more ships across all its cruiselines or possibly sell one or more cruiselines completely.

[wowzz]

Just now, majortom10 said:

sell even more ships across all its cruiselines or possibly sell one or more cruiselines completely

Not sure who would buy them in the current environment, and certainly not at a price that would make economic sense for CCL.

[yorkshirephil]

9 minutes ago, wowzz said:

Not sure who would buy them in the current environment, and certainly not at a price that would make economic sense for CCL.

Exactly, rock and hard place spring to mind, same with cruise prices, they need to go up to cover costs but if they go up will people book?

[majortom10]

7 hours ago, wowzz said:

Not sure who would buy them in the current environment, and certainly not at a price that would make economic sense for CCL.

Apparently there are rumours that there is interest in Seabourn and 2 other cruise lines that I cannot remember. There is always interest if the price is right.

 

[majortom10]

7 hours ago, wowzz said:

Not sure who would buy them in the current environment, and certainly not at a price that would make economic sense for CCL.

Found it on travelweekly.co.uk that Carnival are in preliminary talks to sell Seabourn to Saudi Sovereign Wealth Fund.

[Megabear2]

38 minutes ago, majortom10 said:

Found it on travelweekly.co.uk that Carnival are in preliminary talks to sell Seabourn to Saudi Sovereign Wealth Fund.

That has been ongoing for months. If it's going to happen assumedly they're pretty advanced.

[yorkshirephil]

7 minutes ago, Megabear2 said:

That has been ongoing for months. If it's going to happen assumedly they're pretty advanced.

I believe the Saudi fund already owns a fair chunk of Carnival as part of a loan deal, so there may be some logic in the sale?

[majortom10]

2 hours ago, Megabear2 said:

That has been ongoing for months. If it's going to happen assumedly they're pretty advanced.

Was reported on travelweekly in May.

[Britboys]

4 hours ago, majortom10 said:

Found it on travelweekly.co.uk that Carnival are in preliminary talks to sell Seabourn to Saudi Sovereign Wealth Fund.

So Carnival Corp is looking to sell off their only truly luxury brand then...

[molecrochip]

On 10/20/2022 at 11:27 PM, Britboys said:

So Carnival Corp is looking to sell off their only truly luxury brand then...

But there you've hit the nail on the head. Other than Seabourn, Carnival as a company are not in the luxury travel brand market. Seabourn is therefore the outlier. 

 

Afterall, anything is for sale at the right price. That said, just because there are talks doesn't mean that anything will be agreed. As a listed company, Carnival would need to report to the stock market at the point that it entered into a preliminary agreement for sale. The fact that it hasn't in the past 5 months may be indicative.

 

As for the ships moving to the Carnival Holdings (Bermuda) - its a well structured deal which has meant that Carnival are only paying a premium of about 1% to the rest of the market - which given the state of the industry is significantly is good. Its better than what their refinancing achieved in May. As a guide, Cineworld took $400m of refinancing at over 15% this month.

 

If you read the detail put out, the ships are not the collateral, but assets put into the company to make it a worthy borrower. The bond issue is guaranteed by group companies - not the company itself. As these are relatively new ships, the difference between  their value and what has been borrowed is likely to be the value of borrowings secured directly on the ships to finance them in the first place. This is being paid down mortgage style whereas the bonds will be paid off during 2028.

 

 

[terrierjohn]

On 10/20/2022 at 12:07 PM, wowzz said:

Not sure who would buy them in the current environment, and certainly not at a price that would make economic sense for CCL.

Exactly my thoughts as well, none of the current majors have the spare cash, and anyone with sufficient funds would surely be able to find a better return elsewhere.

[wowzz]

2 hours ago, terrierjohn said:

Exactly my thoughts as well, none of the current majors have the spare cash, and anyone with sufficient funds would surely be able to find a better return elsewhere.

Absolutely  - you are just buying debt, not ships.

[molecrochip]

Carnival don't have a need to sell more ships.

 

2023 bookings are already showing to be at the 'higher end of historical ranges' and whilst prices remain comparatively low compared to land based holidays (which have increased considerably in the last 3 years), they have not fallen compared to historical prices - across the group.

 

Therefore its a cast of moving on and bringing in the profit in 2023 and beyond, and paying down their debt. The more debt they pay down, the less interest they repay, the cheaper they can refinance, and thus the quicker they pay down their debt.

 

You have to remember that the analysts were not upside at Carnival's direction, just the fact that it had moved slower than previously indicated.

[Megabear2]

1 hour ago, molecrochip said:

Carnival don't have a need to sell more ships.

 

2023 bookings are already showing to be at the 'higher end of historical ranges' and whilst prices remain comparatively low compared to land based holidays (which have increased considerably in the last 3 years), they have not fallen compared to historical prices - across the group.

 

Therefore its a cast of moving on and bringing in the profit in 2023 and beyond, and paying down their debt. The more debt they pay down, the less interest they repay, the cheaper they can refinance, and thus the quicker they pay down their debt.

 

You have to remember that the analysts were not upside at Carnival's direction, just the fact that it had moved slower than previously indicated.

I would think 2024 bookings would be more of a marker as all the FCC will have washed through?  The evidence on land based holidays in Europe at least is questionable depending on where you look and in what price ranges.   The Azura fly cruises have offered good value along with the rearranged Baltics and Iona Norway "shuttles" but certainly not most others unless they are the last minute savers.  

 

All cruise lines are about to see what people think of the 2024 offerings and pricing before we say it's all okay.

Edited October 23, 2022 by Megabear2

[majortom10]

13 hours ago, terrierjohn said:

Exactly my thoughts as well, none of the current majors have the spare cash, and anyone with sufficient funds would surely be able to find a better return elsewhere.

I think as reported on travelweekly and previously stated by me in an earlier post if Saudi Sovereign Wealth Fund are interested then don't think money and affordability is a problem and possibly a good value purchase price. Also it seems that higher priced luxury cruise lines have held up very well in current difficult times. Also as reported by molecrochip Seabourn is the only luxury cruise line in Carnival's portfolio so would be sensible to sell and stick with mass market cruise lines.

[terrierjohn]

12 hours ago, majortom10 said:

I think as reported on travelweekly and previously stated by me in an earlier post if Saudi Sovereign Wealth Fund are interested then don't think money and affordability is a problem and possibly a good value purchase price. Also it seems that higher priced luxury cruise lines have held up very well in current difficult times. Also as reported by molecrochip Seabourn is the only luxury cruise line in Carnival's portfolio so would be sensible to sell and stick with mass market cruise lines.

But most of the other big cruise lines also have a luxury line in their range, RCI  has Silversea and NCL has Regent seven seas. It seems very sensible to me that a large global cruise line company should have a luxury division, a mass market brand and a couple of  niche brands to fully cover all passengers financial and quality expectations.