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Genting Announces Sale and Leaseback Deal for Crystal Endeavor


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45 minutes ago, AtA said:

OK so anyone want to explain what this means and why they're doing it?


Very normal with a capital asset....what business are you in - cruises/hospitality or financing?

 

The answers in the quote “The company also said the deal would provide working capital on reasonable terms to support its business activities”

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11 minutes ago, Stickman1990 said:


Very normal with a capital asset....what business are you in - cruises/hospitality or financing?

 

The answers in the quote “The company also said the deal would provide working capital on reasonable terms to support its business activities”

Art! LOL

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39 minutes ago, AtA said:

Art! LOL


Lol

My comment was rhetorical and not directed at you as a question 🙂 

I meant what business is Genting / Crystal in - they are hair using their capital for their core business 

Money is relatively cheap at the moment so if they can get a better return on capital through the business then better to use it for that 

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This has been the norm for the ocean ships for a long time.  I don’t know who currently owns the ocean ships, but under NYK, Symphony and Serenity were leased as well.  Business as usual.

 

Vince

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Same with airlines (not so much the US3) 

It frees up capital so they can invest in something else.  This is all hearsay, but some airlines bought the Boeing dreamliner for 80 milllions in 2004.  When they got them in 2012, they would sell them for a decent profit to one of those leasing companies.  They then leased back for $1mil/month with 10 years leasing agreement. 

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On 12/27/2019 at 5:45 AM, BWIVince said:

This has been the norm for the ocean ships for a long time.  I don’t know who currently owns the ocean ships, but under NYK, Symphony and Serenity were leased as well.  Business as usual.

 

Vince

Interesting. Did not know that.

 

I see both sides. For example - many river cruise companies are paying for their ships in cash up front (Viking and Ama are examples). I am guessing Viking is also paying for their cruise ships with cash. They can probably do this by demanding final payment a year in advance.

 

On the opposite side, we have a State Farm regional office where I live. Several years ago, I had read that State Farm had sold most of their property and planned on leasing it back. This allowed more flexibility if they wanted to close an office and transfer employees to another office.

 

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For many years I was with a bank in the commercial lending area (actually ran IT for the division) - you'd be surprised the names of some very will known companies that did similar things to finance growth and ongoing operations-build a factory and "transfer" it and its equipment to provide funds for ongoing operations and to build more factories. 

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It is not the norm in the cruise industry.  Most of big capital rich lines own their ships. Those that have lots of free cash flow do not need to do this. 

 

Capital poor companies need to do this and because of MV is owned by Genting -- means Genting needs the cash to pay MV.

 

That 7 percent is a rather high rate for a lease.  Expect that for all future Dream/Crystal ships being built by MV.

Edited by PaulMCO
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18 hours ago, PaulMCO said:

It is not the norm in the cruise industry.  Most of big capital rich lines own their ships. Those that have lots of free cash flow do not need to do this. 

 

Capital poor companies need to do this and because of MV is owned by Genting -- means Genting needs the cash to pay MV.

 

That 7 percent is a rather high rate for a lease.  Expect that for all future Dream/Crystal ships being built by MV.


I ask this sincerely since I don’t have direct access to Lloyd’s registry data anymore, but is there a way we can qualify “most”?  I know Carnival has retained ownership over most of its ships (and with all of its subsidiaries maybe that qualifies as most of the big lines), but I can think of many other big lines that don’t....  Like MSC (which seems to be launching a new ship every time I get up from the kitchen table) and Royal Caribbean, including their subsidiaries like Celebrity.

 

Vince

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