Rare pinotlover Posted May 5, 2020 #26 Share Posted May 5, 2020 We aren’t privy to what a bankruptcy might facilitate with NCLH. Used to end any penalties on cancellation or refurbishment of ships ? End lease agreements of expensive real estate? Forced arbitration of debt repayments? A lot of things become more facilitated in bankruptcy than before. The old PCH represents a small portion of NCLH. I’m sure any moves made are in the best interest of the larger beast, not necessarily the smaller cubs. As my TA says “ R ships are becoming an increasingly difficult sell in the current market place. They have their aficionados, but their numbers are shrinking.” I don’t believe there is a reasonable market for 20 year old R ships today. The amount they would bring in a depressed market may not justify selling them. The monies recently spent refurbishing them is probably lost capital adding to debt. If/ When fleet sizes are reduced, I see those ships being the first decommissioned. With all the people here proclaiming they aren’t sailing until at least 2022, what were the expectations? I fully expect a new NCLH to emerge from a bankruptcy. The question is, as Hawaiidan stated, as with UA, AA, GM, et. al., what will it look like and how will it function? Link to comment Share on other sites More sharing options...
Rare Noxequifans Posted May 5, 2020 #27 Share Posted May 5, 2020 (edited) Interesting thread. Don;t have financial expertise but I'll add my two cents. Another key issue is the psychological impact of the latest virus. Specifically, those picture of cruise ships waiting for authorities to permit docking and disembarkation were significant. The market impact was devastating. Edited May 5, 2020 by Noxequifans 2 Link to comment Share on other sites More sharing options...
rafaelc Posted May 5, 2020 #28 Share Posted May 5, 2020 They are not going out of business. It will be a restructuring that will include spin offs and acquisition. This is the likely scenario unless a miracle vaccine is developed this summer. 3 Link to comment Share on other sites More sharing options...
Flatbush Flyer Posted May 5, 2020 #29 Share Posted May 5, 2020 2 hours ago, Hawaiidan said: Not fake news....NCL in talking to the SEC after talking to Price Waterhouse ( their accountant) expressed there is substantial doubt that NCL can survive as a company. if they can not get ADDITIONAL financing, beyond the 400 mil they just got. If they fold... they are going to have a lot of haardware out there and owe money on it... Someone is going to buy at a firesale price the ships will not just be scrapped they will sail to pay off the people who financed them...... What O will look like will be up in the air.... Proably you will see the specialties go from inclusive to pay for starters and reduced and no more O life and air included.... THats my guess if the Stuff hits the fan. But its always darkest before the dawn..... We all are stressed and seeing no good around every corner. It only human nature to be swayed by the media fueled daily panic... Too much information, Too frequent..........overdose I said the TITLE of the post was "fake news." Link to comment Share on other sites More sharing options...
Paulchili Posted May 5, 2020 #30 Share Posted May 5, 2020 (edited) 30 minutes ago, rafaelc said: They are not going out of business. It will be a restructuring that will include spin offs and acquisition. This is the likely scenario unless a miracle vaccine is developed this summer. I'll say it again. This may be fine with people who currently do not have pending fare or deposit refunds - they can wait and see what the restructured line looks like and then book or not book. Those that are awaiting refunds (fares or deposits) may get nothing in the process of "restructuring" and acquisitions. To those it looks and sounds like "going out of business" Edited May 5, 2020 by Paulchili 6 Link to comment Share on other sites More sharing options...
EasyGoingGuy Posted May 5, 2020 #31 Share Posted May 5, 2020 So, for all of you financial types, in a bankruptcy, restructure, reorganization (not an out and out shut the doors and nail the windows shut Going Out of Business event), how does that work? Assets, a bunch of very expensive floating things and goodwill (hard to put a dollar amount on that) and liabilities (a bunch future promises of cruises attached to FCC and payments made (and probably already spent) and outstanding loans). Would the cruise line cancel the liabilities? In what order if so? And, as an aside, would anyone who lost a FCC or payment cruise with that line (or any line) ever again? Just wondering as I have money in this game, a 2021 cruise paid with a FCC. 1 Link to comment Share on other sites More sharing options...
KirkNC Posted May 5, 2020 #32 Share Posted May 5, 2020 It would depend on the exact route the company took but the general answer is anyone who is owed money (deposits or FCC) would become an unsecured creditor and probably get nothing or next to nothing. Link to comment Share on other sites More sharing options...
TrulyBlonde Posted May 5, 2020 #33 Share Posted May 5, 2020 2 hours ago, pinotlover said: We aren’t privy to what a bankruptcy might facilitate with NCLH. Used to end any penalties on cancellation or refurbishment of ships ? End lease agreements of expensive real estate? Forced arbitration of debt repayments? A lot of things become more facilitated in bankruptcy than before. The old PCH represents a small portion of NCLH. I’m sure any moves made are in the best interest of the larger beast, not necessarily the smaller cubs. As my TA says “ R ships are becoming an increasingly difficult sell in the current market place. They have their aficionados, but their numbers are shrinking.” I don’t believe there is a reasonable market for 20 year old R ships today. The amount they would bring in a depressed market may not justify selling them. The monies recently spent refurbishing them is probably lost capital adding to debt. If/ When fleet sizes are reduced, I see those ships being the first decommissioned. With all the people here proclaiming they aren’t sailing until at least 2022, what were the expectations? I fully expect a new NCLH to emerge from a bankruptcy. The question is, as Hawaiidan stated, as with UA, AA, GM, et. al., what will it look like and how will it function? As a former stockbroker, I remember Continental Airlines at 17 cents a share. When AA went to $ 5 per share a few years ago, I loaded up. It is like going to Vegas, but there is risk along with reward. Depends how strong your stomach is. I also have been willing to wait for a significant drop in share value for NCLH. If it reaches my price target, I will load up. Restructuring can bring positive results, but always a gamble. 1 Link to comment Share on other sites More sharing options...
Paulchili Posted May 5, 2020 #34 Share Posted May 5, 2020 (edited) 36 minutes ago, KirkNC said: It would depend on the exact route the company took but the general answer is anyone who is owed money (deposits or FCC) would become an unsecured creditor and probably get nothing or next to nothing. That is my fear. I have insurance for this trip but I was hoping to get the fee back by cancelling the insurance (a large amount) and wait for O refund. I may have to rethink that strategy. If all else fails, there is always the CC to recoup the money from. Edited May 5, 2020 by Paulchili 1 Link to comment Share on other sites More sharing options...
Paulchili Posted May 5, 2020 #35 Share Posted May 5, 2020 10 minutes ago, TrulyBlonde said: I also have been willing to wait for a significant drop in share value for NCLH. If it reaches my price target, I will load up. Go ahead and load up so I can get my refunds 😀 1 Link to comment Share on other sites More sharing options...
Aloha 1 Posted May 5, 2020 #36 Share Posted May 5, 2020 Combining Regent with Oceania would provide some interesting benefits. It would allow the retirement of the R ships while adding several newer 750 passenger ships which could handle the types of cruises the R ships currently do. Link to comment Share on other sites More sharing options...
TrulyBlonde Posted May 5, 2020 #37 Share Posted May 5, 2020 2 minutes ago, Paulchili said: Go ahead and load up so I can get my refunds 😀 You may want to hedge your bets and load up too. Possibly make more money after a restructuring and then can take more cruises. 😉 2 Link to comment Share on other sites More sharing options...
Rare pinotlover Posted May 5, 2020 #38 Share Posted May 5, 2020 24 minutes ago, Paulchili said: That is my fear. I have insurance for this trip but I was hoping to get the fee back by cancelling the insurance (a large amount) and wait for O refund. I may have to rethink that strategy. If all else fails, there is always the CC to recoup the money from. If they take the bankruptcy route the CC probably can’t help you. Logically, I believe the FCC are safe. What I would expect is that, like ff miles, cruises will become capacity controlled on the number , per cabin type, allowed per cruise. You’re not going to have cruises where half the passengers are on FCC. Same as with upper suites. They have to continue generating revenue. The value of any spinoff will depend greatly on its bookings. All those dedicated O cruisers are worth little if the cruises have few bookings. Link to comment Share on other sites More sharing options...
tocruiseguy Posted May 5, 2020 #39 Share Posted May 5, 2020 5 hours ago, Flatbush Flyer said: What's with the "fake news" title? Read the articles! No one is "going out of business" (particularly with the first of many NCLH restructuring investments by private equity weighing in at $400 million). Will there be changes? Of course. Will Oceania disappear? No - Of all the NCLH lines, it has the most flexible size, repeat passenger base and industry positioning to absorb ship jumpers from NCL and Regent. You must get your non fake news from Twitter. Geez, get a grip, this is reality. 1 Link to comment Share on other sites More sharing options...
Aloha 1 Posted May 5, 2020 #40 Share Posted May 5, 2020 This is a snippet of what O sent out to TA's: "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." They intend to set sail as soon as allowed. 4 Link to comment Share on other sites More sharing options...
ropomo Posted May 5, 2020 #41 Share Posted May 5, 2020 FYI, this thread prompted me to do a little checking. I currently am awaiting deposit refunds for 6 people from a cruise I cancelled last month. Hoping for the best, but I just got off an on-line chat with AMEX (platinum card if that makes a difference) regarding my ability to recoup deposits if O declares bankruptcy since normally purchase protection is only available 60 days beyond billing date. They indicated that in light of the Covid-19 crisis they are working with cardholders to make them whole. No guarantee, but it's hope. Link to comment Share on other sites More sharing options...
RJB Posted May 5, 2020 #42 Share Posted May 5, 2020 37 minutes ago, TrulyBlonde said: You may want to hedge your bets and load up too. Possibly make more money after a restructuring and then can take more cruises. 😉 In a bankruptcy the common stock ends up worthless I believe. If that is the case what do you do with your paper then? Maybe you need to buy their bonds which might have some value after they restructure. Am I wrong? Link to comment Share on other sites More sharing options...
JT1962 Posted May 5, 2020 #43 Share Posted May 5, 2020 This is a snippet of what O sent out to TA's: "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." They intend to set sail as soon as allowed.Those moves will help in the short term, but many just add more debt to service long term. The real damage may not be known for 2-4 years. I suspect the cruise industry will look different by then with mergers, acquisitions and shutting down some of the multiple lines under each of the 3 main cruise corporations. Link to comment Share on other sites More sharing options...
tocruiseguy Posted May 5, 2020 #44 Share Posted May 5, 2020 39 minutes ago, TrulyBlonde said: You may want to hedge your bets and load up too. Possibly make more money after a restructuring and then can take more cruises. 😉 Common shareholders would suffer a substantial devaluation in their investment under a restructure, there are less risky investments out there. One of the biggest issues here will be consumer confidence in the company, who is going to book a cruise with NCL now? I guess those who don't follow the news will still do so. This is sort of like what happened to the domestic car manufacturers (GM and Chrysler) they did go bankrupt in the US and sales dropped precipitously but obviously recovered. The difference is they received substantial support from the US and Canadian governments. NCL will be hard pressed to survive without some direct government support. Link to comment Share on other sites More sharing options...
Flatbush Flyer Posted May 5, 2020 #45 Share Posted May 5, 2020 19 minutes ago, pinotlover said: The value of any spinoff will depend greatly on its bookings. All those dedicated O cruisers are worth little if the cruises have few bookings. You're sort of making the point I have been trying to make: smaller lines that cater to folks who may be in a better position to pay will fare better than lines trying to fill megaships with a more frugal demographic. 1 Link to comment Share on other sites More sharing options...
KirkNC Posted May 5, 2020 #46 Share Posted May 5, 2020 16 minutes ago, JT1962 said: Those moves will help in the short term, but many just add more debt to service long term. The real damage may not be known for 2-4 years. I suspect the cruise industry will look different by then with mergers, acquisitions and shutting down some of the multiple lines under each of the 3 main cruise corporations. Agreed but without it, the patient dies. 2 Link to comment Share on other sites More sharing options...
Hawaiidan Posted May 5, 2020 #47 Share Posted May 5, 2020 19 minutes ago, RJB said: In a bankruptcy the common stock ends up worthless I believe. If that is the case what do you do with your paper then? Maybe you need to buy their bonds which might have some value after they restructure. Am I wrong? You do not buy stock/bonds prior to bankruptcy... You buy it after they come out... you will need a good broker to get in line ....a lot of traders will be in line I owned a good bit of UAL when they declared.... It went to zero gave me a good capital loss though... So you do take it in the shorts if you buy prior...... Link to comment Share on other sites More sharing options...
Rare PaulMCO Posted May 5, 2020 #48 Share Posted May 5, 2020 22 minutes ago, RJB said: In a bankruptcy the common stock ends up worthless I believe. If that is the case what do you do with your paper then? Maybe you need to buy their bonds which might have some value after they restructure. Am I wrong? Ordinary Bond holders get screwed too. I am sure the Private Equity Loans are being written that they have 1st pick of the remains. With $4B in needed cash and likely secured with hard assets, ordinary bonds will likely be worthless. 2 Link to comment Share on other sites More sharing options...
Hawaiidan Posted May 5, 2020 #49 Share Posted May 5, 2020 9 minutes ago, Flatbush Flyer said: You're sort of making the point I have been trying to make: smaller lines that cater to folks who may be in a better position to pay will fare better than lines trying to fill megaships with a more frugal demographic. Its the reverse sort of economy of scale ...... Huge/Large ships need to fill 2-3 times the number of cabins to break even The smaller ships get to the break even point with way less people and draw on a more selective and loyal clientele who may be much more solvent than the demographics for the big ships.,. Different crowd Different ships Different level of resources. Link to comment Share on other sites More sharing options...
Hawaiidan Posted May 5, 2020 #50 Share Posted May 5, 2020 (edited) 27 minutes ago, tocruiseguy said: Common shareholders would suffer a substantial devaluation in their investment under a restructure, there are less risky investments out there. Suffer..... ya' you have no idea they will end up not loosing a substantial devaluation They will loose their entire investment... You dont buy in till the new company emerges. and there will be intense completion to get in line to buy in.. There will be groups placing pre-market orders for 10,000 share blocks or more.... the little guy wont get close to the trough........ Cruise lines/ Travel stuff..... is a very risky thing Edited May 5, 2020 by Hawaiidan Link to comment Share on other sites More sharing options...
Recommended Posts
Please sign in to comment
You will be able to leave a comment after signing in
Sign In Now