Tag Archives: Suspension of Operations

Royal Caribbean puts up 28 ships as collateral for $3.2bn bond

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Royal Caribbean fleet fact sheet.

Royal Caribbean Cruises has launched a $3.2 billion bond offering while pledging 28 of its ships and “material intellectual property” as collateral.

The move followed the world’s second-largest cruise group forecasting heavy losses for the first quarter of the year as Covid-19 brought global sailings to a standstill.

The company expects to report a preliminary first-quarter net loss of $1.44 billion compared to a profit of $249.7 million a year earlier.

Royal Caribbean, which was forced to suspend its cruises globally and cut about 23% of its US workforce, said the health crisis has dented its quarterly net income by about $453 million.

Preliminary total revenue for the three months ended March 31 fell 16.7% to $2 billion against the same period last year.

Royal Caribbean declined to specify which ships it had pledged for its debt offering. It had vessels with a net book value of about $22.7 billion as of December 31, including Symphony of the Seas, the world’s largest cruise ship.

The net proceeds from the offering of the $3.3 billion notes will be used to repay a $2.35 billion 364-day loan.

The remainder will be used for “general corporate purposes, which may include repayment of additional indebtedness”.

The parent company of Royal Caribbean International, Celebrity Cruises, Azamara and Silversea, estimates its cash burn to be about $250 million to $275 million a month during a prolonged suspension of operations.

NCLH Successfully Secures More Than $2 Billion of Additional Liquidity

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Norwegian Escape

Norwegian Cruise Line Holdings Ltd. (NCLH) has successfully secured over $2 billion of additional liquidity so it is “well-positioned” to weather the suspension of operations during the Covid-19 pandemic.

On May 5, the company announced the launch of a series of capital markets transactions, led by Goldman Sachs, to raise approximately $2 billion. The transaction has since been upsized to gross proceeds of $2.225 billion.

The transactions consisted of a $400 million public offering of common equity, $750 million exchangeable senior notes offering, $675 million senior secured notes offering and a $400 million private investment from global consumer-focused private equity firm L Catterton.

Contingent on completion of the transactions, the company said on May 6 that it expects to have approximately $3.5 billion of liquidity. The move came a day after NCLH said there were doubts about its ability as “a going concern.”

“This significantly strengthens the company’s financial position and liquidity runway and it now expects to be positioned to withstand well over 12 months of voyage suspensions in a potential downside scenario,” the company said in a news release. “When the transactions are completed, the additional liquidity alleviates management’s concern about the company’s ability to continue as a going concern for the next 12 months.”

A financial analyst report by Wedbush concurs. “What seems to be getting missed is that the company now has the cash in place to survive until mid-to-late-2021 even under a worst-case net cash outflow scenario,” the report said. “While we have been relatively bearish with respect to our assumptions as to when the industry is likely to open back up, much less go back to ‘normal’, the liquidity recently added by NCLH would seem to put the company in a sound position under the majority of plausible scenarios, no small feat given the gauntlet that they needed to run through in recent months to ensure the company’s survival.”

Hurtigruten Extends Temporary Suspension of Operations

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Richard With

Hurtigruten will extend the temporary suspension of operations from pole to pole through May 12, according to a press release.

“The situation is affecting virtually everyone in one way or another. Hurtigruten is no exception. This is a setback for us, for the local communities we work with and for our guests. But the setback is only temporarily,” said Hurtigruten CEO Daniel Skjeldam.

Hurtigruten has not had any confirmed or suspected cases on any ships, the company said.

All Hurtigruten expedition cruises will be suspended until May 12. In addition to already cancelled cruises, this includes the Fridtjof Nansen’s departure from Hamburg, Germany on April 29 as well as the Spitsbergen’s departure from Longyearbyen on May 6.

In addition, Hurtigruten’s Alaska expedition cruise season will be postponed to July due to new travel restrictions from Canadian authorities.

This means that the May 17, May 31, Jun 12, Jun 24 and July 1 Roald Amundsen Alaska departures will be cancelled.

Operations on the Norwegian coast will be suspended through May 20. As of now, the first scheduled round trip departure from Bergen will be on May 21.

In agreement with the Norwegian Ministry of Transport, Hurtigruten has deployed two ships in an amended domestic schedule. The newly upgraded Richard With and  Vesterålen are bringing critical supplies and goods to local Norwegian communities hit hard by travel restrictions.

“Seeing our ships lying idle for a prolonged period of time instead of exploring is difficult. These are extraordinary and emotional times for the entire Hurtigruten team. But I firmly believe it is the only responsible decision in the extraordinary crisis the world is currently facing,” added Skjeldam.