RCL established a new $2.2B line of credit this week, and draws all of it?

[fstuff1]

https://www.fool.com/investing/2020/03/23/royal-caribbean-takes-out-a-new-22-billion-loan.aspx

 

from the article, they had $1.4B in the bank.

now they have $3.6B.

 

Why the need to draw on that credit now and pay interest when they have plenty cash on hand?

and why ALL of it in 1 shot?

[nolimits]

Probably afraid bank would pull back loan

or change limits with no bailout from US and no immediate end in sight to the shutdown of cruising 

[yogimax]

Not weeks... not months... but years before the cruise lines return to profitability,  Meanwhile, costs continue each month.  That $2.2 Billion seems like a lot now but it will disappear well before a profit is made.

[mugtech]

1 hour ago, fstuff1 said:

https://www.fool.com/investing/2020/03/23/royal-caribbean-takes-out-a-new-22-billion-loan.aspx

 

from the article, they had $1.4B in the bank.

now they have $3.6B.

 

Why the need to draw on that credit now and pay interest when they have plenty cash on hand?

and why ALL of it in 1 shot?

They owe me over $10,000 from cancelled cruises.  There may be others out there.  Hope we get our refunds before they run out of cash.  They will have no income for the next 6 weeks, probably longer, and plenty of expenses.  More will be cancelling as final payment dates for July cruises will generate more refunds.  How long will $3.6B last?  Guess only time will tell.

[ONECRUISER]

1 hour ago, mugtech said:

They owe me over $10,000 from cancelled cruises.  There may be others out there.  Hope we get our refunds before they run out of cash.  They will have no income for the next 6 weeks, probably longer, and plenty of expenses.  More will be cancelling as final payment dates for July cruises will generate more refunds.  How long will $3.6B last?  Guess only time will tell.

We'll get our refunds and ships will be sailing again before money runs out. 

Edited March 28, 2020 by ONECRUISER

[drsel]

https://www.fool.com/investing/2020/03/23/royal-caribbean-takes-out-a-new-22-billion-loan.aspx
 
from the article, they had $1.4B in the bank.
now they have $3.6B.
 
Why the need to draw on that credit now and pay interest when they have plenty cash on hand?
and why ALL of it in 1 shot?

Haven't interest rates have been reduced to 0%

[grandgeezer]

27 minutes ago, drsel said:

4 hours ago, fstuff1 said:

https://www.fool.com/investing/2020/03/23/royal-caribbean-takes-out-a-new-22-billion-loan.aspx
 
from the article, they had $1.4B in the bank.
now they have $3.6B.
 
Why the need to draw on that credit now and pay interest when they have plenty cash on hand?
and why ALL of it in 1 shot?

Haven't interest rates have been reduced to 0%

 

Someone, somewhere posted the details of the loan on this website. If I remember right, it started at 2.5% for the first several months and topped out at 2.75% later. Even with no interest rate that comes to $184,000,000 per month. This is new debt, add whatever else they owe and the number to be paid is mind blowing. They can raise more cash by suspending their stock dividend which amounts to about $160,000,000 per quarter.

[drsel]

In addition to zero dividend, maybe they can raise fresh equity by a rights issue or issue of preference shares.

Then there is no interest to be paid, nor repayment required.