Could the HAL Brand be sold off?

[rkacruiser]

An interesting discussion with many good points being made.  Yet, Morningstar is more optimistic than many of us investors that are not specialists.  Morningstar's last rating of CCL is 5 Star.  On my MS account report, their rating is 1.  Read their report.  Yes, debt is a major concern and their share price will not rise (according to their report) above the mid-upper $20's until some/all of the present issues are resolved and, of course, any "left over cash" that can be used will not be used for share repurchases or dividends.  It will be used to pay debt.  

[sergel02]

On 6/28/2022 at 10:50 AM, Suncoastsailors said:

They need to utilize the Main Showroom a lot more. Stop with the nature movies and talk presentations. Bring on guest entertainers and stop with the repetitive same 3-4 dance shows. They don't need BB King and Rolling Stone on the same ship. The Comedy shows have been good and help with those down times from the Main Showroom. Food and service are excellent. You are correct no need for water slides, rock climbing, wave rider, miniature golf, zip lines, etc. 

yeah, I dont know about that. I agree with using the main showroom more but the nature documentaries and talk presentations are something that has appealed to my family and I despite us being younger than the typical demographic. I actually sent feedback I wanted more of them like the underwater one because it felt so immersive with the screens on the Pinnacle class ships. 
 

I do think the productions shows could be better. It wasn’t bad but did lack singing, and after going on the Celebrity Beyond I noticed a difference. 
 

As far as the kids things, some people in this thread seem to think there are only 2 options: Drunk party cruise with screaming kids commandeering the ship and sleepy sailings with no kids and lights out at 10. There is a middle ground. I don’t think they need to appeal to kids and teens the way larger lines do but I do think they should  make sure they have a nice cruise too since families do come. I remember hating the fact there weren’t even kids clubs when I was younger so I’m happy things are changing a bit. For comparison, I feel like Princess and Celebrity’s S-class do a good job overall.

 

Some lines focus on suite experiences, or spas, or activities, but for HAL i think their strength is their focus on enrichment and education, along with the arts and music. There are certain people and families from all demographics it appeals to and enhancing their experience would be good. There are people like me who like the classic feel of cruising and enrichment offerings but don’t want to pay the higher prices or go on the really small ships of other lines.

 

No clue who they’d sell to if HaL was sold. I did have a dream that Viking bought them though 😂

[BermudaBound2014]

On 7/15/2022 at 4:43 PM, ldtr said:

Any ship building already under contract also has guaranteed loans associated with them by the countries in which they are being built.  Loans that those countries are happy to make under very friendly terms since they like keep those shipyard workers employed.  Expect any new construction to have extrememly favorable terms and long due dates.

 

Tell that to Genting. It was a new ship build that broke the straw on the camels back and forced them into bankruptcy. You still didn't address the 15 Billion adjustable debt.

 

Regardless, if you believe what you have said to be true, you should very seriously consider investing at this time. 

[Guest ldtr]

20 hours ago, BermudaBound2014 said:

 

Tell that to Genting. It was a new ship build that broke the straw on the camels back and forced them into bankruptcy. You still didn't address the 15 Billion adjustable debt.

 

Regardless, if you believe what you have said to be true, you should very seriously consider investing at this time. 

Actually what really brought Genting down was not the fact that they were having a ship built.  It was the fact that the owned the shipyard in which the ship was being built.  The start of the collapse of Genting was when they could not refinance debt for the shipyard.  That was the ball that started the entire collapse rolling.  

 

Genting was the only one that purchased their own shipyard for building their own ships.  Not a smart thing todo since shipyards are not exactly known as major money making operations and quite often are subsidized by the governments in which they are located.

 

In this case MV Werften violated loan covenants and was forced into BK when the German government refused to extend additional financing.  The failure of the Genting owned shipyard is wanted started the rest of the failure.

[rkacruiser]

15 minutes ago, ldtr said:

Genting

 

They had been overextended for quite some time.  

[Guest ldtr]

3 minutes ago, rkacruiser said:

 

They had been overextended for quite some time.  

Certainly,  but the trigger point of the collapse was the shipyard failure.

[BermudaBound2014]

1 hour ago, ldtr said:

Actually what really brought Genting down was not the fact that they were having a ship built.  It was the fact that the owned the shipyard in which the ship was being built.  The start of the collapse of Genting was when they could not refinance debt for the shipyard.  That was the ball that started the entire collapse rolling.  

 

And why did the shipyard have debt? Let me refresh you memory...

 

 

https://www.scmp.com/business/companies/article/3162939/genting-hong-kong-faces-demand-us278-billion-debt-bankruptcy-its

 

 

[Guest ldtr]

43 minutes ago, BermudaBound2014 said:

 

And why did the shipyard have debt? Let me refresh you memory...

 

 

https://www.scmp.com/business/companies/article/3162939/genting-hong-kong-faces-demand-us278-billion-debt-bankruptcy-its

 

 

As stated in your article the shipyard ran out of money as the triggering event that cause eveything to collapse and Germany would not make any more loans to the shipyard that Genting owned.

 

If they had been building the ship in someone elses shipyard and did not own MV Werften the triggiering event of the failure would not have occured when it did.

 

The fact that they owned the shipyard meant that unlike in the normal shipbuilding process where the shipyard has its own finances and debt structure totally independent of the cruise line.  In the normal process the cruise lines get guaranteed loans in time usually from the host country to make the payments when the construction milestones are met.  The shipyard, not the cruise line, is responsible for making sure that payroll is met, that materials are purchased and construction goes forward.

 

In the case of Genting, the shipyard ran out of money independent of the ship construction milestones.  Basically they needed funding for their normal operations, which was not profitable, and the ship was not complete enough to qualify for the next milestone payment.  So not only would the German  government have had to support additional loans for the shipyard, in addition to the already agreed upon loads for the ships construction

 

As this article state Genting had already stopped paying some creditors.  It was the failure of the shipyard and the resulting violation of covenants that resulted in a massive amount of debt being called due.

 

Genting Hong Kong Says MV Werften Insolvency to Spark Defaults

 

https://gcaptain.com/hong-kong-cruise-line-insolvency/

Germany says Genting Group at fault as shipyard files for bankruptcy

https://www.asgam.com/index.php/2022/01/11/germany-says-genting-group-at-fault-as-shipyard-files-for-bankruptcy/

 

Saying that Genting failed because they were build a new ship is a bit absurd.  Genting failed because the shipyard went into bankruptcy, triggering violation of debt covenants, because as the second article indicated they were not willing to add any additional funds (10%) of the rescue package to the shipyard in order to get 90% funded by the German Government.  Even if there was no ship there, a failure of the shipyard, which has other projects, not just the Genting cruise ship, it would have created the same failure cascade.

[BermudaBound2014]

@ldtr I'm never afraid to admit when I'm wrong. I did not carefully read your very first  statement and, as such, did not explain my position with any clarity. What you have written above is much more accurate than my attempt to paint with a broader brush.

 

The point I was going for (and failed to make) was the premise that all the new ship builds under contract could very well prove problematic for CCL and a reason to default (final straw).  Just because the ship yards may want to make nicey nicey with the cruise lines to keep the grind going, does not release the piper from coming to call.  In other words, all debt is a liability (including ship build contracts). 

[rkacruiser]

20 hours ago, BermudaBound2014 said:

In other words, all debt is a liability (including ship build contracts). 

 

Have you read the most recent Morningstar's report about CCL?  How can you explain their 5 Star rating for the company?  

[BermudaBound2014]

Just now, rkacruiser said:

 

Have you read the most recent Morningstar's report about CCL?  How can you explain their 5 Star rating for the company?  

 

I only read what you supplied, but because they are backwards looking, I would say that the last month showed significant growth over the month before. 

[rkacruiser]

14 minutes ago, BermudaBound2014 said:

 

I only read what you supplied, but because they are backwards looking, I would say that the last month showed significant growth over the month before. 

 

Agree.  And, there are comments in the report that are encouraging as to bookings for 2022 second half and into 2023.  

 

There is an overhanging cloud for the booking vacancies that remain.  That is the amount of FCC that are outstanding.  As time goes on and these FCC are not used, they will expire.  

 

Not a Morningstar comment, but one by me, given the continued Covid issues (seemingly become more serious again) and the on-going mess with air travel, will many/most of these FCC that have not been used ever going to be used?  

[BermudaBound2014]

5 minutes ago, rkacruiser said:

 

Agree.  And, there are comments in the report that are encouraging as to bookings for 2022 second half and into 2023.  

 

There is an overhanging cloud for the booking vacancies that remain.  That is the amount of FCC that are outstanding.  As time goes on and these FCC are not used, they will expire.  

 

Not a Morningstar comment, but one by me, given the continued Covid issues (seemingly become more serious again) and the on-going mess with air travel, will many/most of these FCC that have not been used ever going to be used?  

 

IMO the absolute best news for the cruise industry happened just this afternoon. If cruise lines get rid of testing and vaccine requirements (yet to be determined), I think we will see cruise occupancy perk up. I do think restructuring is inevitable for CCL but that's just my opinion. 

[rkacruiser]

2 minutes ago, BermudaBound2014 said:

If cruise lines get rid of testing and vaccine requirements (yet to be determined), I think we will see cruise occupancy perk up

 

Agree.  We are going to see a very divided population regarding travel, I think.  There will be those who come to believe that it's time to move beyond our fears of Covid and are willing to accept an additional travel headache and travel/cruise.  There will be those who believe:  no way, Jose!  I am unwilling to accept the risks until those risks are mitigated to either like they once were or something close to it.  There may be those who don't want to lose the money that is invested in their FCC.  They will finally decide to book a cruise before those credits expire.  There will be those who choose to let their FCC expire.  

 

And, then, there are those very experienced long term cruisers who have been regulars for many years.  Some have sat at home during the pandemic watching the sands of time pass down the hour glass.  Wanting to travel; could not.  Now, yes, they could.  But, the desire, their physical capabilities, their heath may cause some of these Mariners, etc. regretfully think:  my time for travel has passed.  The cruise lines will no longer be able to depend on those Mariners, the Captain's Circle folk, etc. to make bookings.  

 

This situation that the cruise lines find themselves is unique in their history.  New leadership at RCI and CCL gives me faith that these companies will be winners when the race is over--if it ever is.  

[oldbluff]

On 6/26/2022 at 10:35 AM, BermudaBound2014 said:

 

We've been discussing this in the stock forum thread for months. It's an interested thread if this is your jam. We're a fun group :). 

 

I do respectfully disagree with future bookings being safe. You absolutely could be correct, but it's still up in the air. Take a look at the Crystal forum. Lots of guests out to the tune of $10,000+ dollars. We don't have any evidence that if this happens it will be a gradual change anymore than we have evidence there will be a hostile take over (which is on the table). Chapter 7/11/et all. It's simply still too early to know.

 

What we do know is that the buyer will likely purchase for pennies on the dollar given the current financial state of CCL. And any buyer needs to be SUPER cash flush. CCL is still hemorrhaging money at an alarming rate.

Can you please provide a link to the stock forum thread? Thanks!

[RICHARD@SEA]

one major point is that it's all about the Benjamin's.... pre CARNIVORE CORP HAL was a 4 Star line competing against The French &n Cunard Lines...way back in the pre 1990s days people boarded ships as a first class vacation...now its mass market w passengers looking to get a "deal"

 

Carnivore Corp is a business not so much concerned w quality as cost basis...so Carnivore started to scrap ships, delayed maintenance & basically drove the ships into the ground(if they made $$$ they were saved).

 

There still are passengers on the Crystal boards still screaming for a resurrection of a line whose parent company basically ..... passengers & reservation holders  w the bankruptcy of the line.

 

HAL once had moneyed passengers(tho not enough of them obviously) who spent & expected 4 * service etc...those days are long gone...so long as passengers don't spend $$$  - any way possible..the ships & lines will be liquidated, sold off or scrapped...that's business...TODAY

[RICHARD@SEA]

Just now, RICHARD@SEA said:

one major point is that it's all about the Benjamin's.... pre CARNIVORE CORP HAL was a 4 Star line competing against The French &n Cunard Lines...way back in the pre 1990s days people boarded ships as a first class vacation...now its mass market w passengers looking to get a "deal"

 

Carnivore Corp is a business not so much concerned w quality as cost basis...so Carnivore started to scrap ships, delayed maintenance & basically drove the ships into the ground(if they made $$$ they were saved).

 

There still are passengers on the Crystal boards still screaming for a resurrection of a line whose parent company basically ..... passengers & reservation holders  w the bankruptcy of the line.

 

HAL once had moneyed passengers(tho not enough of them obviously) who spent & expected 4 * service etc...those days are long gone...so long as passengers don't spend $$$  - any way possible..the ships & lines will be liquidated, sold off or scrapped...that's business...TODAY

PS ROTTERDAM V - pre CARNIVORE CORP was one of my all time favorite ships of all....