Time for NCLH financial-related posts?

[Travelcat2]

4 minutes ago, Pcardad said:

I didn't mean you....I hate typing, it never properly conveys my thoughts. 

 

I don't know why NCLH is so bad at communication...but they have been working on this financing for a good while and they would not release it unless they were confident in it going through.

 

For what it's worth, I just gave an earful to my contacts at Regent about their lack of communication in a time when people deserve to know what the heck is going on. A real missed opportunity this is.

 

Your perspective is always reasonable.  We panicked for a few minutes - were about to cancel one of our four future cruises but waited until I was in contact with others.  We are still watching and thinking while communicating with some friends (also CC members) via email.  We need to hear other perspectives (balanced ones like yours).  Thank you!

[Pcardad]

😃

 

I will do my best to differentiate between facts and opinion.

 

My opinion is that there is more to this story then we know. I think we will learn more soon. 

[Travelcat2]

9 minutes ago, Pcardad said:

😃

 

I will do my best to differentiate between facts and opinion.

 

My opinion is that there is more to this story then we know. I think we will learn more soon. 

 

Since you dislike typing, why don't you post using the speech option (if you have an iPhone).  It is faster and easier and likely more accurate than people like me that type too fast and my iMac turns words into some weird things sometimes.

 

pappy - definitely not true!  It is nice to have posts from people that are in contact with Regent and know what is going on.  This is why I contacted our TA and several CC'ers (that do not always agree with me) to get their input.  

Edited May 5, 2020 by Travelcat2

[Steve Q]

I was watching CNBC a short while ago. The reporter stated (I am paraphrasing) that there is a $400 million dollar commitment on the table from L Catterton. Those funds, however, will only be available if Norwegian can get a commitment of another billion dollars from other investors. They had no comment about the likelihood of such an additional investment. 

[greykitty]

Well, not everyone, especially consumers, looks forward to private equity involvement in a cherished commercial entity - or so I've observed.  I would say L Catterton, like other successful PE firms, does has a reputation for being able to make the very hard decisions once they're involved.

 

Last hour or so, sounds like NCLH is hoping for a $2 billion capital raise altogether, at least at the moment.

 

https://www.barrons.com/articles/norwegian-cruise-line-aims-to-raise-1-4-billion-stock-slides-51588689119

[RJ2002]

56 minutes ago, Pcardad said:

😃

 

I will do my best to differentiate between facts and opinion.

 

My opinion is that there is more to this story then we know. I think we will learn more soon. 

 

The regulatory filings are certainly headline-grabbing, and concerning to many.   Looking forward to more updates you may have which paint a more optimistic picture.  

[CBWIR]

The predicate of the going concern was if they are not able to raise the $2billion. Typical boilerplate language. Goldman Sachs would not be bringing it to market unless they were confident they could raise the entire amount. Give it a week or two and if they are unable to raise the funds, then start to worry. If they raise the funds, then the smart money is saying they will survive.

[Pcardad]

The Barrons article posted by Greykitty is very helpful and, I think, tries to cover both sides. 

 

I look at it like this. If NCLH has, or will have, 18 months of liquidity and we don't lock this virus down in that time frame....we are all going to have much bigger problems then getting a deposit back.

[RJ2002]

From the Barron's article:

 

There has been some disagreement about how much cash Norwegian is burning each month as its ships sit idle during the pandemic crisis. But several analysts estimated recently that Norwegian had six to eight months of liquidity remaining with no sailings.

 

The additional cash needs are perhaps an acknowledgement that it's going to take more than 6-8 months for the industry to get through this, which sort of mirrors the general sentiment about a more extended delay before cruising resumes.

Edited May 5, 2020 by RJ2002

[Pcardad]

Plus it is always cheaper to raise it when you don't need it....

[JIMinNC]

3 hours ago, wristband said:

And who in their right mind will board a cruise ship in July with Covid-19 spreading and spiking like wildfire in Texas and Florida (projection today: 3,000 US deaths in May)?

 

 

A little off-topic, but while I fully agree July is way too early to even consider discretionary air travel, and especially cruising, I don't think the charts support that it's "spiking like wildfire in Texas and Florida". Here is info from the NY Times on case counts and deaths. Florida is on a long-term downtrend in cases per day and is basically flat in deaths (which I think may be a better measure of real spread, since case counts can be impacted by the number of tests given). Texas deaths are also basically flat. While Texas cases have been rising slightly over the last couple of weeks, that state is only now starting to ramp up their testing to be comparable to the US average, so their case counts may be more indicative of increased testing than actual increasing spread. Even if increased testing isn't a factor, I would characterize Texas as flat to slightly up at worst, and Florida as flat or slightly down. It will be interesting to see how things go over the next couple of weeks as some businesses open. If they can avoid a true spike and keep things basically flat or only slightly up, that may start paving a possible path forward to finding a middle ground between the shutdown orders and a return to the old normal.

 

[JMARINER]

Here is a direct link to the complete official NCLH form K8 filing. It is extremely  detailed and delves into ll aspects of the HCLH's  liability, including to the Credit card Companies and the new-builds on order.

 

Filing

 

To me the most telling paragraph is below.

 

J

 

"...The substantial doubt about our ability to continue as a going concern may affect the price of our ordinary shares and the grade of our credit rating, may impact our relationship with third parties with whom we do business, including our customers, vendors, lenders and employees, may impact our ability to raise additional capital and may impact our ability to comply going forward with covenants in our debt agreements. In the event we are unable to secure additional financing, our ability to continue as a going concern over the next twelve months will depend upon a series of factors, including the duration of the layup of our ships, the speed with which, and the extent to which, bookings resume once ships are sailing again, the ability of travel agencies, suppliers and other vendors to resume operations..."

 

 

[cruiseluv]

2 hours ago, Wendy The Wanderer said:

 

Well gee, if their call center can be so efficient, why can't their accounts department?  Why can't they get those refunds out to us in a timely fashion?

Isnt the answer to that obvious?

[wishIweretravelling]

2 hours ago, Pcardad said:

Did no one read this?

 

Today the Company has launched a series of capital markets transactions, led by Goldman Sachs, which are expected to raise approximately $2 billion. These transactions are expected to consist of 1) $350 million public offering of common equity, 2) $650 million exchangeable senior notes offering, 3) $600 million senior secured notes offering and 4) $400 million private placement from global consumer-focused private equity firm L Catterton.

Contingent on completion of the transactions, the Company expects to have approximately $3 billion of liquidity. This strengthens the Company’s financial position and ensures it is well positioned to withstand well over 12 months of voyage suspensions in a potential downside scenario. While this is not the Company’s base case expectation, the Company has taken a proactive approach to protect its future given the significant uncertainty and unknown duration of the COVID-19 global pandemic. 

 

Was it dated today (May 5, 2020)? That's the date on the filing with the SEC that's being cited throughout this thread. I just re-scanned the filing (Form 8K), and this financing is not reflected there. Of course, they can't get away with "expected" financing on SEC filings. But if this financing comes through, it looks like it would be enough to keep them afloat for a while. But that while depends on when they can sail again, how many will sail with them, and how many people are willing to keep their money in deposits and FCCs. This SEC filing, and the accompanying publicity, are not going to help with those latter two factors.

 

The sky isn't falling, but it isn't looking very sunny either.

 

[Wendy The Wanderer]

2 minutes ago, cruiseluv said:

Isnt the answer to that obvious?

 

I keep being rhetorical but nobody seems to notice.

[Pcardad]

6 minutes ago, wishIweretravelling said:

 

Was it dated today (May 5, 2020)? That's the date on the filing with the SEC that's being cited throughout this thread. I just re-scanned the filing (Form 8K), and this financing is not reflected there. Of course, they can't get away with "expected" financing on SEC filings. But if this financing comes through, it looks like it would be enough to keep them afloat for a while. But that while depends on when they can sail again, how many will sail with them, and how many people are willing to keep their money in deposits and FCCs. This SEC filing, and the accompanying publicity, are not going to help with those latter two factors.

 

The sky isn't falling, but it isn't looking very sunny either.

 

Released today to the TA...no idea why NCLH wasn't more proactive in their disclosures...they should have been.

 

My opinion - Looks like they can survive at least 18 months with no sailings. I suggest that if the virus isn't under control in 18 months we will all have much greater problems. 

[Bellaggio Cruisers]

47 minutes ago, Pcardad said:

Released today to the TA...no idea why NCLH wasn't more proactive in their disclosures...they should have been.

 

My opinion - Looks like they can survive at least 18 months with no sailings. I suggest that if the virus isn't under control in 18 months we will all have much greater problems. 

Absolutely!

[tripperva]

Selling ships, assets, furnishings, etc can raise some funds but only when there are buyers. This time around there might not be anyone in the market.

[CruiserFromMaine]

I’m putting my recently retired auditor hat on...

 

It’s a big deal for a public company to re-issue December financial statements, especially to add a going concern footnote and auditor’s opinion. While the company may expect to raise $2 billion dollars, there wasn’t enough certainty of success on that front or on other cited plans to avoid the auditor’s going concern opinion. A going concern opinion essentially means that there is lots of worry (“substantial doubt”) about the company being a viable business a year from when the report is issued. 
 

Obviously, getting another $1.6 billion would make a huge difference.

 

I will be interested to see if other companies, cruise lines or not, re-issue their December financial statements similarly. 
 

For those of us awaiting refunds, I get some comfort from this disclosure: The Company also has agreements with its credit card processors that govern approximately $1.6 billion at December 31, 2019 in advance ticket sales that have been received by the Company relating to future voyages. These agreements allow the credit card processors to require under certain circumstances, including the existence of a material adverse change, excessive chargebacks and other triggering events, that the Company maintain a reserve which could be satisfied by posting collateral. The Company is in discussions regarding the nature of collateral, if any, relating to these agreements.
 

It makes sense that the credit card companies don’t want to be on the hook for a merchant’s financial difficulties. 

[cruiseluv]

1 hour ago, Wendy The Wanderer said:

 

I keep being rhetorical but nobody seems to notice.

 I did forget to add I hoped it was rhetorical.  At least your refund is on the queue 

[Wendy The Wanderer]

Just now, cruiseluv said:

 I did forget to add I hoped it was rhetorical.  At least your refund is on the queue 

 

Whatever that is worth, I'm not sure, but better than being in the queue to have your future trip cancelled.

[Pcardad]

23 minutes ago, CruiserFromMaine said:

I’m putting my recently retired auditor hat on...

 

It’s a big deal for a public company to re-issue December financial statements, especially to add a going concern footnote and auditor’s opinion. While the company may expect to raise $2 billion dollars, there wasn’t enough certainty of success on that front or on other cited plans to avoid the auditor’s going concern opinion. A going concern opinion essentially means that there is lots of worry (“substantial doubt”) about the company being a viable business a year from when the report is issued. 
 

Obviously, getting another $1.6 billion would make a huge difference.

 

I will be interested to see if other companies, cruise lines or not, re-issue their December financial statements similarly. 
 

For those of us awaiting refunds, I get some comfort from this disclosure: The Company also has agreements with its credit card processors that govern approximately $1.6 billion at December 31, 2019 in advance ticket sales that have been received by the Company relating to future voyages. These agreements allow the credit card processors to require under certain circumstances, including the existence of a material adverse change, excessive chargebacks and other triggering events, that the Company maintain a reserve which could be satisfied by posting collateral. The Company is in discussions regarding the nature of collateral, if any, relating to these agreements.
 

It makes sense that the credit card companies don’t want to be on the hook for a merchant’s financial difficulties. 

 

I believe the disclosure is required, ahead of time, before certain types of financing/funds can be raised/implemented. 

 

To keep this in perspective, how many companies do you think will be in business 1 year from now if the virus isn't under control?

 

Thank you for posting the relevant passage regarding credit card reserves and the possible implementation of such.

[CBWIR]

1 hour ago, CruiserFromMaine said:

I’m putting my recently retired auditor hat on...

 

It’s a big deal for a public company to re-issue December financial statements, especially to add a going concern footnote and auditor’s opinion. While the company may expect to raise $2 billion dollars, there wasn’t enough certainty of success on that front or on other cited plans to avoid the auditor’s going concern opinion. A going concern opinion essentially means that there is lots of worry (“substantial doubt”) about the company being a viable business a year from when the report is issued. 
 

Obviously, getting another $1.6 billion would make a huge difference.

 

I will be interested to see if other companies, cruise lines or not, re-issue their December financial statements similarly. 
 

For those of us awaiting refunds, I get some comfort from this disclosure: The Company also has agreements with its credit card processors that govern approximately $1.6 billion at December 31, 2019 in advance ticket sales that have been received by the Company relating to future voyages. These agreements allow the credit card processors to require under certain circumstances, including the existence of a material adverse change, excessive chargebacks and other triggering events, that the Company maintain a reserve which could be satisfied by posting collateral. The Company is in discussions regarding the nature of collateral, if any, relating to these agreements.

It makes sense that the credit card companies don’t want to be on the hook for a merchant’s financial difficulties. 

1 hour ago, CruiserFromMaine said:

I’m putting my recently retired auditor hat on...

 

It’s a big deal for a public company to re-issue December financial statements, especially to add a going concern footnote and auditor’s opinion. While the company may expect to raise $2 billion dollars, there wasn’t enough certainty of success on that front or on other cited plans to avoid the auditor’s going concern opinion. A going concern opinion essentially means that there is lots of worry (“substantial doubt”) about the company being a viable business a year from when the report is issued. 
 

Obviously, getting another $1.6 billion would make a 

 

Perfunctory 8-K language before an offering.  If they raise the $2billion, they will be in good shape. Wait to see what happens and then follow the money. I'll bet it gets done and fairly quickly.

 

[greykitty]

I disagree that 'going concern' and reissuance of a year-end opinion is ever perfunctory, but I guess we'll have to agree to disagree.

[CBWIR]

15 minutes ago, greykitty said:

I disagree that 'going concern' and reissuance of a year-end opinion is ever perfunctory, but I guess we'll have to agree to disagree.

The only way they could issue a Prospectus was with this language. We'll see who is right. And if they raise the funds, PWC will remove the going concern opinion.

Edited May 5, 2020 by CBWIR