RCCL - Financing problems with Oasis

[Jaxsonbrownie]

Boy, got to give a hand to sensationalism here. This is just a 10K report from October 2008 people. They have to disclose everything that might happen. Its kind of like side effects for meds. They have to tell you everything that might happen, not neccessarily that it will. Oasis will be fine. Allure might go to the back burneer, but it goes to show, "chicken little" at its finest......

[cassieroll]

I predicted many months ago, when they first began taking bookings, that this ship will never sail under the banner of Royal Caribbean, and that if it does it will not last the first six months.

 

I also predicted that Royal Caribbean will never launch the second ship of the Oasis class.

 

I cannot remember in modern cruise history that a new ship did not sell out it's inaugural sailing within one month of opening bookings. This one is still not sold out. To top it all off the stock is currently at $6.70, down 82.4% from one year ago.

Ummm, everyone's stock is down. Not just Royal's.

[BobBeaSea]

Can't vouch for the Sultan of Brunei, but Dubai's sheiks probably won't be able to help, because they've called a halt to a lot of their major construction projects, and even the poor QE2 may not now be turned into a hotel - although she did look lovely when I saw her there in December :)

 

Agreed :). Dubai is in serious trouble having very little oil or natural gas. They have known this for some time hence the push to set themselves up as the Middle East "Switzerland" and going on a commercial building binge. Abu Dhabi, the true financial power in the UAE and owner of 90% of the oil just sent $10 billion in bailout funds to Dubai. If I needed a loan I'd go to Abu Dhabi first :). Tough times are everywhere, including the Middle East and the Gulf. This is not good....

[dwjoe]

I cannot remember in modern cruise history that a new ship did not sell out it's inaugural sailing within one month of opening bookings. This one is still not sold out.

That's an awfully broad statement. Got any facts to back that up?

 

Here's one that might be pertinent... the new Carnival Dream sails in September and they haven't started taking bookings yet AFAIK.

[dwjoe]

When/if Royal bites the dust' date=' they'll sell whatever assets required to pay off their debtors..... Frankly, I don't see Carnival buying any if them...but if they did, it wouldn't be that monstrosity Oasis.[/quote']

I think your statement is overly pessimistic.

[Gonzo70]

I predicted many months ago, when they first began taking bookings, that this ship will never sail under the banner of Royal Caribbean, and that if it does it will not last the first six months.

 

I also predicted that Royal Caribbean will never launch the second ship of the Oasis class.

 

I cannot remember in modern cruise history that a new ship did not sell out it's inaugural sailing within one month of opening bookings. This one is still not sold out. To top it all off the stock is currently at $6.70, down 82.4% from one year ago.

 

 

And so far it appears as though your predictions are dead wrong.

[klfhngr]

Getting hammered on a cruise ship... check. Just don't call it a "bailout", that has negative connotations at sea... :D

 

You're right, lol!

[negc]

I posted this on the other thread about Oasis Financing but the following is from Carnival Corp's 10-k

 

Our future operating cash flow may not be sufficient to fund future obligations, and we may not be able to obtain financing, if necessary, in sufficient amounts and on terms that are favorable or consistent with our expectations. In addition, our counterparties’ ability to perform may adversely impact us.

 

Our forecasted cash flow from future operations may be adversely affected by various factors, including, but not limited to, declines in guest demand, increased competition, overcapacity, the deterioration in general economic and business conditions, liquidity and other issues in the global debt and equity markets, terrorist and pirate attacks and the threats thereof, ship accidents and other incidents, adverse publicity, the impact of changes in, or disruptions to, the global credit markets on our financing costs and counterparty credit and performance risks, and increases in fuel prices, as well as other factors noted under these “Risk Factors” and under the “Cautionary Note Concerning Factors That May Affect Future Results” section below. To the extent that we are required, or choose, to fund future cash requirements, including current and future shipbuilding commitments, from sources other than cash flow from operations, available cash and current external sources of liquidity, including committed ship financings, we will have to secure such financing from banks or through the offering of debt and/or equity securities in the public or private markets or take other actions, such as our recently announced suspension of dividend payments. There is no guarantee that such financings will be available in the future to fund our future obligations.

Our access to, and the cost of, financing will depend on, among other things, the maintenance of our strong long-term credit ratings and the availability of sufficient amounts of financing. Carnival Corporation and Carnival plc’s senior, unsecured long-term debt ratings are “A-” by Standard & Poor’s and “A3” by Moody’s. Carnival Corporation’s and Carnival plc’s short-term corporate credit ratings are “A-2” by Standard & Poor’s and “P-2” by Moody’s. Our Standard & Poor’s A- debt rating recently was assigned a negative outlook, which reflects their concern that the weakened state of the economy and pull back in consumer spending will pressure our ability to sustain our A- debt rating. If we were to be downgraded by S&P to BBB+, this would result in a slight increase in our borrowing costs on a prospective basis, and this could have an impact on our ability to obtain committed credit facilities or issue debt. Similarly the ability of our counterparties, primarily associated with our cash equivalents, committed financing facilities, contingent obligations, derivative instruments, insurance contracts and new ship progress payment guarantees, to perform may adversely impact us if any of their financial positions weaken materially or they suffer other financial disruptions.

 

Sounds exactly like the same thing that is in Royals 10-k:

 

The adverse impact of the continuing worldwide economic downturn on the demand for cruises could adversely impact our operating results, cash flows and financial condition.

 

The demand for cruises is affected by international, national and local economic conditions. The current worldwide economic downturn has had an adverse effect on vacationers’ discretionary income and consumer confidence which has resulted in cruise booking slowdowns, decreased cruise prices and lower onboard revenues for us and for the others in the cruise industry. We cannot predict the extent or duration of this downturn or the timing or strength of a subsequent economic recovery. However, if the downturn continues for an extended period of time or worsens, we could experience a prolonged period of booking slowdowns, depressed cruise prices and reduced onboard revenues. This could adversely impact our operating results, cash flows and financial condition including the impairment of the value of our ships, goodwill and other intangible assets.

 

We may not be able to obtain sufficient financing or capital for our needs or may not be able to do so on terms that are acceptable or consistent with our expectations.

 

To fund our capital expenditures and scheduled debt payments, we have historically relied on a combination of cash flows provided by operations, drawdowns under available credit facilities, the incurrence of additional indebtedness and the sale of equity or debt securities in private or public securities markets. The decrease in consumer cruise spending as a result of the current economic environment is adversely impacting our cash flows from operations. The disruption in the credit markets has resulted in a lack of liquidity worldwide which may affect our ability to successfully raise capital or to do so on acceptable terms. These factors may prevent us from having sufficient available capital or financing to meet our needs or to do so on acceptable terms. During 2008, our credit rating was lowered from BBB- with a negative outlook to BB with a negative outlook by Standard and Poor’s. In January 2009, Standard and Poor’s placed our credit rating on credit watch with negative implications. In addition, our credit rating was lowered from Ba1 with a stable outlook to Ba2 with a negative outlook by Moody’s. There is no assurance that our credit ratings will not be lowered further. The lowering of our credit ratings may increase our cost of financing and can make it more difficult for us to access the financial markets. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.

 

 

The whole Carnival 10-k can be found here:

http://www.sec.gov/Archives/edgar/da...13746/d10k.htm

 

 

And Royals 10-k can be found here:

http://www.sec.gov/Archives/edgar/da...35629/d10k.htm

 

 

Both are very large but there's some interesting stuff in both.

 

Thanks for the post, not that those who seem to delight in forecasting RCI's imminent demise, will bother to read it much less understand the purpose of this language in a 10-k filing. The language in the two filings is so similar that one might think they were written by the same attorneys. An "enterprising reporter" could probably make a career out of writing similarly scary articles about most, if not all, of our major corporations based on their 10-k filings.

It might be interesting, if anyone has reliable figures, to see how "sold out" the inaugural sailing of the Carnival Dream is at this point. Certainly its introduction has not aroused the same interest in the cruising public as Oasis of the Seas and I doubt that anyone other than the most die-hard Carnival fan has this on their "must do" list.:rolleyes:

[dwjoe]

It might be interesting, if anyone has reliable figures, to see how "sold out" the inaugural sailing of the Carnival Dream is at this point.

I was curious about the new Carnival Dream as well. I can't seem to book it via carnival's web site, so I assume it's not open to bookings yet.

[negc]

I know Sanjoseca - but its easy to see who has a hidden agenda.

 

 

 

 

 

jj...

 

No one can ever accuse you of having a "hidden" agenda. It is out there in all its glory for everyone to see.:rolleyes:

[xpcdoojk]

No one can ever accuse you of having a "hidden" agenda. It is out there in all its glory for everyone to see.:rolleyes:

 

Now that was funny!:D

 

jc

[SherriZ366]

This is a joke' date=' right?

 

 

When/if Royal bites the dust, they'll sell whatever assets required to pay off their debtors..... Frankly, I don't see Carnival buying any if them...but if they did, it wouldn't be that monstrosity Oasis.[/quote'] I see from your profile that your favorite cruise line is Carnival and that you sail mostly Carnival. So I'm viewing your statement through that prism.

[coxswain]

No one can ever accuse you of having a "hidden" agenda. It is out there in all its glory for everyone to see.

 

 

 

Well isn't that the best way negc - what you see is what you get !!

 

 

 

 

jj......

[sanjoseca]

Well isn't that the best way negc - what you see is what you get !! jj......

 

Absolutely, that is the best way. It's been very rare to see it that way on here lately. Some are fooling themselves and don't actually realize that they have a hidden agenda.

[coxswain]

Royal Caribbean Cruises Ltd., the company building the world’s largest cruise ship, is in talks to obtain increased loan guarantees from Finland and possibly a direct government loan to help finance the vessel’s delivery.

 

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5SrbcYwFi_4&refer=home

 

 

 

 

jj....

[AdrenalineRush]

I was curious about the new Carnival Dream as well. I can't seem to book it via carnival's web site, so I assume it's not open to bookings yet.

Follow this link.Not many cabins left for the inaugural.

 

http://www.carnival.com/Itinerary.aspx?embkCode=CIV&itinCode=EM4&durDays=12&shipCode=DR&subRegionCode=E&rateCode=PPB&sailingID=48576&sailDate=9/21/2009

[GXmanDC]

Royal Caribbean Cruises Ltd., the company building the world’s largest cruise ship, is in talks to obtain increased loan guarantees from Finland and possibly a direct government loan to help finance the vessel’s delivery.

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5SrbcYwFi_4&refer=home

 

 

 

jj....

 

I do not own stock in RCI, but for those that do financing back by Finland would be a good thing. They'll get favorable rates with gov't backing. Actually, it may be foolish to not go for it in our current age of "government-backed capitalism" or "managed socialism." I heard those terms at an industry conference I attended.

[GXmanDC]

Royal Caribbean Cruises Ltd., the company building the world’s largest cruise ship, is in talks to obtain increased loan guarantees from Finland and possibly a direct government loan to help finance the vessel’s delivery.

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5SrbcYwFi_4&refer=home

 

 

 

jj....

 

I do not own stock in RCI, but for those that do financing back by Finland would be a good thing. They'll get favorable rates with gov't backing. Actually, it may be foolish to not go for it in our current age of "government-backed capitalism" or "managed socialism." I heard those terms at an industry conference I attended.

[cruisecrasy]

And so far it appears as though your predictions are dead wrong.

 

??? - IMO there is no evidence either way as of this date...Lets wait & see!!

[cruisecrasy]

Sorry - dreaded double post!!

[SherriZ366]

I do not own stock in RCI, but for those that do financing back by Finland would be a good thing. They'll get favorable rates with gov't backing. Actually, it may be foolish to not go for it in our current age of "government-backed capitalism" or "managed socialism." I heard those terms at an industry conference I attended.

And Finland has a lot of jobs to proect at the Turku shipyard.

[G'ma]

I was curious about the new Carnival Dream as well. I can't seem to book it via carnival's web site, so I assume it's not open to bookings yet.

 

It certainly is....and has been for quite a while. I'm holding a balcony on the transatlantic in October.

[G'ma]

I see from your profile that your favorite cruise line is Carnival and that you sail mostly Carnival. So I'm viewing your statement through that prism.

 

That's true. I like their ships, their prices, their food and the ambience. I've been cruising with Carnival since they only had one ship...the Mardi

Gras..back in the 70's...when I was a lot younger and better looking. Yet, here I am 30+ years later, grayhaired and wrinkled, and still having the time of my life on one of their Fun Ships. In January, I completed my 64th cruise on that line.

 

However, in my career, I have over 250 cruises under my belt and have sailed on almost every major ship on almost every cruise line...some now defunct. I've spent MONTHS on cruise ships.....

 

They all have their positives and I've never, ever had a bad cruise on any ship at any time.

 

So, while my prism has a "whale tail funnel", I have a hard eye when it comes to cruising. I'm not the least impressed by "bells and whistles" and always look for the steak while avoiding the "sizzle" at all costs. My comments concerning Royal's Oasis and Allure have nothing to do with whether or not Royal provides a good cruising experience......I've been on RCI many times and had great cruises. The comments are concerning the unfortunate timing of these 2 ships in an economy where many are hanging on by their fingernails and cruising is not an option. They also reference the viability of ships of these sizes which must be filled week after week, that have limited ports of call and seem to be floating amusement parks/shopping malls instead of ships.

 

I'm sure Oasis will probably have a good first season....but, I believe that with the prices they will need to charge to pay for it, the problems with sharing space with 5000+ people, the "for-fee" venues which will, no doubt, be there....they are going to have trouble..... This is assuming that they make it through the current mess without being taken over or forced into liquidity.

[G'ma]

G'ma.......if you were to check on what Carnival can and cannot due.......from a legal standpoint..........they cannot purchase Royal Caribbean. It's against the anti trust laws.

 

Rick

 

I didn't say they would "buy" Royal Caribbean.. I said they wouldn't buy Oasis or Allure.

 

While anti-trust laws prevent Carnival from purchasing the entire company, nothing prevents them from purchasing individual ships if RCI is forced into liquidity.....

[G'ma]

Well you just blew your shot at being a Royal Champion.............

 

I'm not a "champion" of any cruise line. I'm a cruiser who will go with the best price and the best cruise experience.......those are my parameters.

 

While it's true I have a soft spot for Carnival....we grew up together.....it's equally true I enjoy Holland American, Costa, Princess (not all their ships....I'm real picky here), European river cruises..... Crikey's, I even enjoyed the Mississippi Queen several years ago.

 

I was on Easycruise last year for a 4-nighter in the Greek Isles as part of a terrific rail adventure of France, Italy and Greece...mostly on my own..a friend joined me for a couple of weeks.

 

My eyes are wide open anytime my wallet is involved.......