RCL Stock

[BermudaBound2014]

1 minute ago, Biker19 said:

Down 10+%.

 

10% So far. I picked up some shorts last week when it topped $38 anticipating they would need to raise cash. I never thought it would be this soon. I figured they would wait until after NCL released. Now NCL has delayed their release until August 9th which is rarely a good sign. 

[exm]

Almost ready to buy again: buy around $33, sell around $38.

[Baron Barracuda]

Took quick look but didn't see conversion price on 2 7/8% and 4 1/4% bonds of '23 they plan to repurchase but at time they were issued in June '20 stock traded around $60.  Can only assume new converts will carry higher interest rate and lower conversion price.  They claim issuance is non-dilutive but each $1 of new bond will likely be convertible into more RCL shares than $1 of old bond.

[BermudaBound2014]

Here's how it all shook out today. All three cruise lines were down more than the DOW. NCL and CCL at about 1.5%. Of course, with today's press release, RCL took the biggest hit and ended the day down 7.6%. 

 

Edited August 1, 2022 by BermudaBound2014

[DirtyDawg]

On 8/1/2022 at 1:36 PM, Baron Barracuda said:

Took quick look but didn't see conversion price on 2 7/8% and 4 1/4% bonds of '23 they plan to repurchase but at time they were issued in June '20 stock traded around $60.  Can only assume new converts will carry higher interest rate and lower conversion price.  They claim issuance is non-dilutive but each $1 of new bond will likely be convertible into more RCL shares than $1 of old bond.

I think they can get away with saying theses bonds are not dilutive because technically they can choose to pay the holder in cash rather than the stock. Of course, will they have the cash if and when the holders elect to convert is a whole other discussion!

[At Sea At Peace]

On 7/29/2022 at 6:33 PM, BermudaBound2014 said:

Stock is up because people are reading the headlines and not the 10Q. Here is the 10Q if anyone is interested. https://www.rclinvestor.com/financial-info/sec-filings/

 

 

@At Sea At Peace what's your interpretation? You've been quiet and I miss you 🙂 

 

Oh we're just busy with lake (NH) and ocean (FLL) with many of the family (after the Covid 2-year interruptions) while school is out for the GKs.  A lot of work, a lot fun.

 

On 8/1/2022 at 1:36 PM, Baron Barracuda said:

They claim issuance is non-dilutive but each $1 of new bond will likely be convertible into more RCL shares than $1 of old bond.

 

They play word salads.  It's like acceptable schizophasia to protect against SEC actions based on complaints.  A literal parsing of every aspect of their PRs (the SEC filing original, not the pumpers and the like) is required.

 

There are, in fact, certain strategies to assert "non-dilutive" convertible debt.  A good article with a recent example.

 

https://www.amttraining.com/knowledgebank/financing/zero-dilution-convertible-bonds-an-elegant-illustration-of-imperfect-market-pricing/

 

I don't know if, or how, such is really the case with RCL.

[At Sea At Peace]

17 hours ago, DirtyDawg said:

I think they can get away with saying theses bonds are not dilutive because technically they can choose to pay the holder in cash rather than the stock. Of course, will they have the cash if and when the holders elect to convert is a whole other discussion!

 

Well, had a bit of time to look at the 8K and parse the word salad.  🙄

 

You are correct in the "technically regard," that they can say "net neutral to outstanding shares and share equivalents after taking into account our ability to settle any remaining outstanding notes with cash."

 

The cash is at $50.11 per share, a 40% premium to the 8/1 PPS.

 

Also, with regard to "share equivalents," the current fully diluted share equivalents would include the potential shares under the current convertible debt that is being replaced by the new convertible debt.

 

Again, word salads.

 

Little mention of the interest rate MATH ~ $25,000,000 per year in added interest.

[DirtyDawg]

52 minutes ago, At Sea At Peace said:

 

Well, had a bit of time to look at the 8K and parse the word salad.  🙄

Personally I prefer Shrimp or Lobster salad to word salad!

 

52 minutes ago, At Sea At Peace said:

 

You are correct in the "technically regard," that they can say "net neutral to outstanding shares and share equivalents after taking into account our ability to settle any remaining outstanding notes with cash."

 

The cash is at $50.11 per share, a 40% premium to the 8/1 PPS.

 

Also, with regard to "share equivalents," the current fully diluted share equivalents would include the potential shares under the current convertible debt that is being replaced by the new convertible debt.

 

Again, word salads.

 

Little mention of the interest rate MATH ~ $25,000,000 per year in added interest.

Thanks for looking at the 8K. You hit the nail on the head; bottom line these replacement converts are costing lots of extra cash to service. I'll have to look and see how much other debt is maturing this year. That would cost RCL even more in increased interest costs. 

[Baron Barracuda]

The $1B in new notes maturing in 2025 carry 6% rate and are convertible around $50.  The bonds they are buying back, the 2 7/8% and 4 1/4% notes of '23 are convertible at $80 and $72 respectively.  

 

Lot to pay for two extra years of liquidity.  

[BermudaBound2014]

Sorry gang, I shorted more today. I see no reason why this is trading up. 

[At Sea At Peace]

On 8/3/2022 at 1:35 PM, BermudaBound2014 said:

Sorry gang, I shorted more today. I see no reason why this is trading up. 

 

Well, my take is the mid-terms approach will spur all kinds of "good news." 

 

I expect the CDC to scale back Covid restrictions for quarantining (if no symptoms), spacing footage, school and work protocols, etc. (I also expect interest rates to be moved indirectly downward by the FED and gas/oil the same until November).  It's a team effort.  😲

 

All such will help the cruise line stocks in the perception of "traders."  There are no fundamental reasons to feel good about such after November and a return to an unfettered market; however, there is a lot of play (volatility) between now and then.

 

😉

[AlohaLivin]

When I look at how much people are willing to spend on cruises and the extras, I don’t have any concern about the future of our RCL or NCL stock. I purchased more in the recent dips and will sit and wait this out as I have many times over the decades. 

[At Sea At Peace]

2 hours ago, AlohaLivin said:

When I look at how much people are willing to spend on cruises and the extras, I don’t have any concern about the future of our RCL or NCL stock. I purchased more in the recent dips and will sit and wait this out as I have many times over the decades. 

 

Long is usually a reasonable proposition.

 

I'm simply concerned that we've had a once in a century pandemic (i.e., over the decades, there has been no such similar event) and the debt versus equity has turned topsy-turvy; debt up $12B and equity down $8B.

 

That debt needs to be serviced.  They, the distressed debt holders (junk bond status), are vultures IMO.

 

[AlohaLivin]

1 minute ago, At Sea At Peace said:

 

Long is usually a reasonable proposition.

 

I'm simply concerned that we've had a once in a century pandemic (i.e., over the decades, there has been no such similar event) and the debt versus equity has turned topsy-turvy; debt up $12B and equity down $8B.

 

That debt needs to be serviced.  They, the distressed debt holders (junk bond status), are vultures IMO.

 

In my view, investing is sometimes a science and sometimes an art. Our increased cruise line investments  have been more the latter. The last time I did that I purchased Square during the initial offering period since I used in my private health practice and loved it - thankfully that was a wonderful investment.  At age 62 now we moved 2 years ago to a more conservative portfolio, but I have some funds that I continue to use for “gut” purchases, Time will tell. 

[bucfan2]

On 8/3/2022 at 1:35 PM, BermudaBound2014 said:

Sorry gang, I shorted more today. I see no reason why this is trading up. 

Ouch....

[At Sea At Peace]

On 8/4/2022 at 5:58 PM, AlohaLivin said:

In my view, investing is sometimes a science and sometimes an art. Our increased cruise line investments  have been more the latter. The last time I did that I purchased Square during the initial offering period since I used in my private health practice and loved it - thankfully that was a wonderful investment.  At age 62 now we moved 2 years ago to a more conservative portfolio, but I have some funds that I continue to use for “gut” purchases, Time will tell. 

 

Yep, good thoughts.

 

There is something interesting about the RCL recent $1.15B ($900M+$150M), first being the $150M optional additional amount (green shoe) was tendered.

 

So, it makes sense to look at the debt structures and players.  Morgan Stanley and Bank of America executed the current deal.  They, along with RCL, refinanced 60% or so of two outstanding issuances that were due in 2023.  That % prevents certain tendering rules and also allows the institutional investors (primarily hedge funds) to essentially roll over the hedges.

 

Question ~ why couldn't NCL and CCL do this, especially CCL that just directly diluted equity with new shares?

 

Analysts Answer ~ Per the IFR article ~ Morgan Stanley has agreed to backstop the sale of $3.15B of new debt in 2023.  That will allow RCL to wait for better bond market conditions, i.e., rates.

 

https://www.ifre.com/story/3466616/cruise-control-royal-caribbean-navigates-choppy-cb-markets-hnc8dkg5xr

 

So, it appears that RCL has a life preserver available from Morgan Stanley through 2023, at least in regards to handling expected maturities of long-term debt.

 

 

 

 

[BermudaBound2014]

I know this is the RCL forum, but all three cruise companies have been trading in sync and their quarterlies have more in common than different. NCL released Q2 this morning. Quick summary:

 

-They missed all their targets.

-Added another 500 million in debt

-Expect to add more debt is Q3

 

It has been reported that ships need 95% occupancy to turn actual profit. I don't know how NCL can turn this ship around until their occupancy levels rise. Occupancy was a dismal 65% in second quarter and they HOPE to get to 80% in third quarter. 

 

 

 

The conference call happens at 10a.m. I suspect there will be more information given then about the removal of all vaccine requirements. 

 

https://www.globenewswire.com/news-release/2022/08/09/2494757/24500/en/Norwegian-Cruise-Line-Holdings-Reports-Second-Quarter-2022-Financial-Results.html

[Baron Barracuda]

Niece and friends just off the NCL Joy.  Very hard to make dinner reservations despite mdr being only 1/2 full.  2 1/2 hours for dinner.  Brother had similar situation last month on Freedom.  Obviously severely short staffed.   NCL only projecting 80% loads next qtr held down by staffing.   All cruise lines in same situation to varying degrees.  Needs to be resolved before they can start making money.

[stjohnbeachlover]

5 hours ago, BermudaBound2014 said:

I know this is the RCL forum, but all three cruise companies have been trading in sync and their quarterlies have more in common than different. NCL released Q2 this morning. Quick summary:

 

-They missed all their targets.

-Added another 500 million in debt

-Expect to add more debt is Q3

 

It has been reported that ships need 95% occupancy to turn actual profit. I don't know how NCL can turn this ship around until their occupancy levels rise. Occupancy was a dismal 65% in second quarter and they HOPE to get to 80% in third quarter. 

 

 

 

The conference call happens at 10a.m. I suspect there will be more information given then about the removal of all vaccine requirements. 

 

https://www.globenewswire.com/news-release/2022/08/09/2494757/24500/en/Norwegian-Cruise-Line-Holdings-Reports-Second-Quarter-2022-Financial-Results.html

Yes, I own shares in all three companies and the price per share was down again overnight. I bought low so I am not overly concerned at this point.

[The_Big_M]

On 8/9/2022 at 11:00 PM, BermudaBound2014 said:

 

It has been reported that ships need 95% occupancy to turn actual profit. I don't know how NCL can turn this ship around until their occupancy levels rise. Occupancy was a dismal 65% in second quarter and they HOPE to get to 80% in third quarter. 

 

 

This quarter covered both start-up and initial sailings, plus capacity constraints due to covid. These sailings could not be 100% capacity just due to reality. In spite of that when it's known it wouldn't be 100, 65% overall was achieved, and it notes that some sailings were at 100%. In line with expectations.

 

As those issues have passed and the previous target was met, I don't see any reason to doubt the 80% target.

[BermudaBound2014]

4 minutes ago, The_Big_M said:

As those issues have passed and the previous target was met, I don't see any reason to doubt the 80% target.

 

I'm not doubting their target, I'm just noting that with occupancy levels this low; at some point the piper is going to come calling. Just how long they can they hold out? 

[exm]

Is NCL allowing unvaxed kids under 12 to sail?

[BermudaBound2014]

5 hours ago, exm said:

Is NCL allowing unvaxed kids under 12 to sail?

 

Beginning Sept 3, NCL allows ALL unvaccinated people to sail regardless of age. 

 

 

[BermudaBound2014]

5 hours ago, exm said:

Is NCL allowing unvaxed kids under 12 to sail?

 

Just a FYI, Announced today (Aug 10), RCL and Celebrity are allowing unvaccinated cruisers also. They don't seem quite as broadly opened as NCL but still plenty of cruises to choose from if you are looking for a cruise that welcomes the Unvaccinated.

 

 

https://www.cruiseindustrynews.com/cruise-news/28030-royal-caribbean-dropping-vaccine-requirements-for-select-cruises.html

[At Sea At Peace]

11 hours ago, BermudaBound2014 said:

 

Beginning Sept 3, NCL allows ALL unvaccinated people to sail regardless of age. 

 

 

 

BB

 

Remember when all of the rage was NCL, through their valiant opposition to FL prohibition to require documentation of vaccination, was for the good health and safety of their passengers, was bloviated by FDR repeatedly as 'the business plan' and such was lauded here? 

 

And that all of that testing of vaccinated passengers and the draconian lockdowns if testing positive on board 'for the good of everyone' was "so good, so good" don't you know?  😉

 

So, that business model, once hailed, is now the polar opposite, and is conveniently now hailed.  🙃 

 

There has been no change in the science. 😷

 

Hmmm.  😲