CCL Share Dilution

[molecrochip]

Carnival have already said that during this quarter (to 30 August), they expect to return to a operating profit and monthly cash in-flow.  As soon as this happens, the cash burn stops. Once this happens, the rates and which they can sell bonds will fall (within the overall market which is rising).

 

However, the analysts are acting on knowns (i.e. previous quarters) and the fact that Covid and Ukraine are unknowns.

 

People complain about Carnival's debt profile. If they had not of taken on debt, they would already have been declared bankrupt. That made taking on debt the correct route. Now the journey begins to pay down the debt.

 

For a number of years, Carnival is not going to be a good buy for big investors. Nor is it likely to generate significant capital returns, especially as the current big investors will have taken significant positions above the current price. Accordingly, whether you publish an expected valuation of $0 per share or $7ps it makes little difference to the investor who spent $40ps.

 

So, the $1bn pays down some debt - less interest cost therefore more retained cash therefore less debt refinancing in future.

This is now already factored into the share price

 

Say, Seabourn is sold and pays down some debt - less interest cost therefore more retained cash therefore less debt refinancing in future.

This is unlikely to affect the share price as you offload assets and debt $ for $.

 

The final step could be a debt for equity swap. This would again dilute shareholdings, or alternative a rights issue.

 

All of which could bring debt down below $20m by 30 Nov 23. Just my thoughts based upon various commentaries and knowing nothing. I'll put my crystal ball away now - it keeps glitching.

 

One final comment. Paying down debt for a big company is a bit like a mortgage. Potential capital repayments (amounts not be refinanced) start off slow, release a little more cash (as not used to pay interest) which then allows a slightly bigger debt repayment... repeat. The next 2 or 3 years will be tough but the Corporation finance team will have projected this over 10 years.

[zap99]

25 minutes ago, molecrochip said:

Carnival have already said that during this quarter (to 30 August), they expect to return to a operating profit and monthly cash in-flow.  As soon as this happens, the cash burn stops. Once this happens, the rates and which they can sell bonds will fall (within the overall market which is rising).

 

However, the analysts are acting on knowns (i.e. previous quarters) and the fact that Covid and Ukraine are unknowns.

 

People complain about Carnival's debt profile. If they had not of taken on debt, they would already have been declared bankrupt. That made taking on debt the correct route. Now the journey begins to pay down the debt.

 

For a number of years, Carnival is not going to be a good buy for big investors. Nor is it likely to generate significant capital returns, especially as the current big investors will have taken significant positions above the current price. Accordingly, whether you publish an expected valuation of $0 per share or $7ps it makes little difference to the investor who spent $40ps.

 

So, the $1bn pays down some debt - less interest cost therefore more retained cash therefore less debt refinancing in future.

This is now already factored into the share price

 

Say, Seabourn is sold and pays down some debt - less interest cost therefore more retained cash therefore less debt refinancing in future.

This is unlikely to affect the share price as you offload assets and debt $ for $.

 

The final step could be a debt for equity swap. This would again dilute shareholdings, or alternative a rights issue.

 

All of which could bring debt down below $20m by 30 Nov 23. Just my thoughts based upon various commentaries and knowing nothing. I'll put my crystal ball away now - it keeps glitching.

 

One final comment. Paying down debt for a big company is a bit like a mortgage. Potential capital repayments (amounts not be refinanced) start off slow, release a little more cash (as not used to pay interest) which then allows a slightly bigger debt repayment... repeat. The next 2 or 3 years will be tough but the Corporation finance team will have projected this over 10 years.

Of course you are correct. Big companies, like governments total debt rarely reduces and is often rolled over. In these exceptional times, institutions may expect some reduction in debt, but will be looking for some share price growth and dividend payments. Carnival have survived, for now. If they are expecting sales of there products to return to ,or exceed previous levels they need to sort out their poor customer service. Folk have choices and don't, generally appreciate being treated as cash cows, or with contempt. The future is not assured, yet.

[Bazrat]

4 hours ago, davecttr said:

If the ship is the destination we should treat it like a package holiday. You go and a number of the facilities and entertainments are closed for 'operational' reasons. The holiday is not as advertised so you should get compensation.

You can think of it as you wish, but read the small print operational reasons might need them to close facility’s, same as any shore based operations 

[Bazrat]

1 hour ago, molecrochip said:

Carnival have already said that during this quarter (to 30 August), they expect to return to a operating profit and monthly cash in-flow.  As soon as this happens, the cash burn stops. Once this happens, the rates and which they can sell bonds will fall (within the overall market which is rising).

 

However, the analysts are acting on knowns (i.e. previous quarters) and the fact that Covid and Ukraine are unknowns.

 

People complain about Carnival's debt profile. If they had not of taken on debt, they would already have been declared bankrupt. That made taking on debt the correct route. Now the journey begins to pay down the debt.

 

For a number of years, Carnival is not going to be a good buy for big investors. Nor is it likely to generate significant capital returns, especially as the current big investors will have taken significant positions above the current price. Accordingly, whether you publish an expected valuation of $0 per share or $7ps it makes little difference to the investor who spent $40ps.

 

So, the $1bn pays down some debt - less interest cost therefore more retained cash therefore less debt refinancing in future.

This is now already factored into the share price

 

Say, Seabourn is sold and pays down some debt - less interest cost therefore more retained cash therefore less debt refinancing in future.

This is unlikely to affect the share price as you offload assets and debt $ for $.

 

The final step could be a debt for equity swap. This would again dilute shareholdings, or alternative a rights issue.

 

All of which could bring debt down below $20m by 30 Nov 23. Just my thoughts based upon various commentaries and knowing nothing. I'll put my crystal ball away now - it keeps glitching.

 

One final comment. Paying down debt for a big company is a bit like a mortgage. Potential capital repayments (amounts not be refinanced) start off slow, release a little more cash (as not used to pay interest) which then allows a slightly bigger debt repayment... repeat. The next 2 or 3 years will be tough but the Corporation finance team will have projected this over 10 years.

After reading your response which makes sense I still think we are doomed doomed I repeat doomed 

[Bazrat]

On 7/22/2022 at 12:04 PM, Yorkypete said:

We have a cruise booked for Sept on Britannia to the Baltic. We are now cancelling a more expensive cruise on Iona for March due to the two things, Carnival being in deep s--- and the rapid spread of covid once more. We cannot afford to lose the money, simple as that.

So now you only have a passing interest in P&O and any further comments will be based on that fact

[d9704011]

1 minute ago, Bazrat said:

Now the journey begins to pay down the debt.

 

Or, go bankrupt later than they ought to have done and leave more unsecured creditors holding the bag.

[Bazrat]

Just now, d9704011 said:

Or, go bankrupt later than they ought to have done and leave more unsecured creditors holding the bag.

You know they will go bankrupt 

[Yorkypete]

4 hours ago, davecttr said:

If the ship is the destination we should treat it like a package holiday. You go and a number of the facilities and entertainments are closed for 'operational' reasons. The holiday is not as advertised so you should get compensation.

The ship may be the destination for some but I like the ports as it is a chance to visit other countries to try them out before visiting for a longer period.  If it is JUST for the ship it is cheaper to go on a small ship from Bridlington or another seaside resort.

[Billish]

Just now, Yorkypete said:

The ship may be the destination for some but I like the ports as it is a chance to visit other countries to try them out before visiting for a longer period.  If it is JUST for the ship it is cheaper to go on a small ship from Bridlington or another seaside resort.

I don't think you understand the concept of a resort at sea.

If you can find me a 14 night cruise that leaves Bridlington, I would be very interested.

[Yorkypete]

27 minutes ago, Bazrat said:

So now you only have a passing interest in P&O and any further comments will be based on that fact

Perhaps.   and further comments will only be on past experience! as are most on here. Please remember that there are 70 people posting on this forum.....out of  possibly 500,000 P&O cruisers...a tiny minority.

 

[AnnieC]

41 minutes ago, Bazrat said:

You know they will go bankrupt 

Is that a question or a statement? Sometimes punctuation makes all the difference...

 

 

[jeanlyon]

13 hours ago, Billish said:

Too late to debate this now, but there are more than sufficient ports in Europe that can accomodate 6000+ pax ships,  so that is not an issue (and, lets face it, the ship is the destination not the ports). The new millenium cruiser does not really care about the itinerary - they want to be entertained  and fed and watered,  which is where the profit is.

And, pro rata Covid cases are the same, regardless of the size of the ship.

Feel free to comment on roi with regard to capex and anticipated depreciation at your leisure. 

 

The ship is definitely not the destination for me and many others.  The ship is our means to get to some nice places.

[terrierjohn]

27 minutes ago, Billish said:

I don't think you understand the concept of a resort at sea.

If you can find me a 14 night cruise that leaves Bridlington, I would be very interested.

and has all the facilities of Iona or Arvia.

[terrierjohn]

12 minutes ago, jeanlyon said:

The ship is definitely not the destination for me and many others.  The ship is our means to get to some nice places.

But it is for many new cruisers, especially families, where shore excursions to explore further afield would be a big cost factor.

[Billish]

17 minutes ago, terrierjohn said:

But it is for many new cruisers, especially families, where shore excursions to explore further afield would be a big cost factor.

Exactly, which is why P&O are building big new ships for the younger generation.

[Eglesbrech]

5 minutes ago, Billish said:

Exactly, which is why P&O are building big new ships for the younger generation.

Which is fine in theory but how do they fill them off season if they completely alienate their older cruisers?

 

I’m sure the bean counters have thought about it and perhaps they make enough in the peaks to allow for less profitable months of the year. But they could make more in these months if they targeted the older groups who can travel out with the main school holidays.

 

[yorkshirephil]

23 minutes ago, Eglesbrech said:

Which is fine in theory but how do they fill them off season if they completely alienate their older cruisers?

 

Sell them cheap. Pretty much as they do with some land holidays. Three weeks for the price of 2, free AI, free tours. This is why the long cruises to the Caribbean in winter are popular with us pensioners. 

[Yorkypete]

2 hours ago, terrierjohn said:

and has all the facilities of Iona or Arvia.

I believe I do.  Having said that, if you just like being on the ocean waves then you can do that at many UK seaside resorts.. As to a resort at sea, as Billish says, well to me it is mainly a pleasurable way of reaching places I have never been to and those I want to visit again. I can eat out at better places than the dining facilities on a ship....and much cheaper and see much better entertainment locally..

 

 

Edited July 24, 2022 by Yorkypete

[terrierjohn]

8 minutes ago, Yorkypete said:

I believe I do.  Having said that, if you just like being on the ocean waves then you can do that at many UK seaside resorts.. As to a resort at sea, well to me it is mainly a pleasurable way of reaching places I have never been to and those I want to visit again. I can eat out at better places than the dining facilities on a ship....and much cheaper.

 

But not with Med, Canary or even summer Baltic weather.

[Bazrat]

3 hours ago, AnnieC said:

Is that a question or a statement? Sometimes punctuation makes all the difference...

 

 

Sorry didn’t go to a proper school like you

[Bazrat]

3 hours ago, Yorkypete said:

Perhaps.   and further comments will only be on past experience! as are most on here. Please remember that there are 70 people posting on this forum.....out of  possibly 500,000 P&O cruisers...a tiny minority.

 

Past experiences precovid most not really applicable now but my experience is post pandemic 

[Bazrat]

2 hours ago, Eglesbrech said:

Which is fine in theory but how do they fill them off season if they completely alienate their older cruisers?

 

I’m sure the bean counters have thought about it and perhaps they make enough in the peaks to allow for less profitable months of the year. But they could make more in these months if they targeted the older groups who can travel out with the main school holidays.

 

Is there a off season ?

[Billish]

28 minutes ago, Bazrat said:

Is there a off season ?

Can't say I'd get worked up about a 7 day cruise out of Southampton on Iona in the middle of February !

[Bazrat]

5 minutes ago, Billish said:

Can't say I'd get worked up about a 7 day cruise out of Southampton on Iona in the middle of February !

For me any holiday is great but I am easily pleased

[AnnieC]

46 minutes ago, Bazrat said:

Sorry didn’t go to a proper school like you

It wasn't a criticism, it was a question (and you haven't answered it, so I am still none the wiser).