More ships to be used as collateral to for extra money

[shof515]

Source: http://www.nclhltdinvestor.com/node/12816/html

 

NCL Corporation amended the export-credit backed facilities that finance Norwegian Bliss, Norwegian Breakaway, Norwegian Encore, Norwegian Escape, Norwegian Getaway and Norwegian Joy to incorporate the terms of a 12-month debt holiday initiative offered to the cruise industry by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The debt holiday was initiated to provide interim debt service and financial covenant relief for borrowers during the current global COVID-19 pandemic with respect to their Hermes guaranteed financings. Across the facilities detailed below, these amendments provide approximately $386 million of incremental liquidity to the Company through April 2021.

[njhorseman]

51 minutes ago, shof515 said:

Source: http://www.nclhltdinvestor.com/node/12816/html

 

NCL Corporation amended the export-credit backed facilities that finance Norwegian Bliss, Norwegian Breakaway, Norwegian Encore, Norwegian Escape, Norwegian Getaway and Norwegian Joy to incorporate the terms of a 12-month debt holiday initiative offered to the cruise industry by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The debt holiday was initiated to provide interim debt service and financial covenant relief for borrowers during the current global COVID-19 pandemic with respect to their Hermes guaranteed financings. Across the facilities detailed below, these amendments provide approximately $386 million of incremental liquidity to the Company through April 2021.

Thanks for posting this, but your thread title is inaccurate. The agreements are not "more ships to be used as collateral (to) for extra money", but rather as you state in the body of your post, which is a quote from Item 1.01 of the SEC Form 8-K filing,  they are temporary holidays from having to meet the existing debt service obligations for these ships. This will allow NCLH to use the money for other operating expenses rather than paying the principal and interest due on these loans, without defaulting on their debt service obligations. Of course this means that NCLH will over the long run actually increase its debt service obligations as additional interest will accrue on these deferred debt service payments. 

 

It's comparable to the bank holding the mortgage on your home agreeing to your not having to make your payments for the next year in return for your agreement to later pay additional interest on the deferred amount.

 

 

 

 

Edited April 24, 2020 by njhorseman

[Love my butler]

NCLH is burning about $250 million/month.  They are projected to have about 5 months before bankruptcy is imminent.  This money will merely allow them to hang on for a bit longer.

[bonvoyagie]

Carnival has already used ships as collateral on loans. The last burn rate I saw for Carnival was 900m/mo, RCCL 450m/mo, and NCL 150m/mo. Carnival claims to be able to hold out until Dec,

[MaryZ]

3 hours ago, bonvoyagie said:

Carnival has already used ships as collateral on loans. The last burn rate I saw for Carnival was 900m/mo, RCCL 450m/mo, and NCL 150m/mo. Carnival claims to be able to hold out until Dec,

Huge difference between the balance sheet for Carnival and NCL

Carnival has cash.  NCL has none.

 

[mking8288]

This article in Barron's explained it - 

(fixed) thanks - NJH, got it changed in time ...  my bad

https://www.barrons.com/articles/hershey-stock-earnings-expectations-guidance-chocolate-pandemic-covid-19-51587646864

 

Edited April 25, 2020 by mking8288

[njhorseman]

12 minutes ago, mking8288 said:

This article in Barron's explained it - 

https://www.barrons.com/articles/hershey-stock-earnings-expectations-guidance-chocolate-pandemic-covid-19-51587646864

 

 

Wrong article?

[mking8288]

Sorry folks - couldn't fix the linked article, here is the corrected one, let's try it again:
https://www.barrons.com/articles/cruise-lines-are-burning-through-cash-their-survival-depends-on-luring-back-customers-after-coronavirus-51587741331

 

It discussed those FCC/pending refunds as customer deposits (huge sums) and being used as floats/cash for the cruiseliens (not a surprise) ... NCL's bond status downgraded to being "junk" - lowest/worst position among the big 3, etc.  Consistent with discussions above. 

Edited April 25, 2020 by mking8288

[njhorseman]

55 minutes ago, MaryZ said:

Huge difference between the balance sheet for Carnival and NCL

Carnival has cash.  NCL has none.

 

Carnival has cash because it just raised over $ 6 billion via stock issuance and offering senior secured notes carrying an outrageously high 11.5% coupon.

 

Prior to this latest action, NCL had secured $1.55 billion via a credit facility secured by the Epic.

[drvmywifecrzy]

I have a claim in on the Escape if they don't issue my refund within 90 days.

[numberguy]

17 hours ago, Love my butler said:

NCLH is burning about $250 million/month.  They are projected to have about 5 months before bankruptcy is imminent.  This money will merely allow them to hang on for a bit longer.

 

Exactly.  That's why corporations do this.  To hang on until they can't anymore, if it comes to that.  Any prudent corporation would do just that.

Edited April 25, 2020 by numberguy

[mnsweeps]

CCL has Saudi money invested. If they need more, Saudi royals would fund it. NCL bankruptcy is more or less imminent in next few months.

[Love my butler]

8 hours ago, numberguy said:

 

Exactly.  That's why corporations do this.  To hang on until they can't anymore, if it comes to that.  Any prudent corporation would do just that.

The problem with NCL is 4-5 months from now does not look for them making ANY money.  If/when cruises start again, so many ships will be filled with FCC delayed cruisers yet NCL will have all the tremendous costs of operating ships with crew and passengers.  I just don't see how NCL avoids some form of bankruptcy.