Will $700 million be enough to stay afloat?
Updated: Feb 10, 2021
Royal Carribean Group (RCG) which owns Royal Carribean, Azamara, Silverseas and Celebrity Cruise line secured an additional $700 Million dollar loan if they choose to use the funds from Morgan Stanley with an option to borrow an additional 300 million if needed. The loan is approved for “general corporate purposes”. RCG is spending about 250 million a month to stay afloat which includes but not limited ship maintenance expenses, necessary staff salary, loan payments, and obligations for ships on order. For the second quarter RCB reported a net loss of 1.6 billion due to the suspending of sailings due to Covid-19. RCG is focusing on its financial health to weather the storm until sailings can resume and has recently taken the following actions.
The issuance of $1.0 billion of priority guaranteed notes and $1.15 billion of convertible notes;
The issuance of GBP 300 million of commercial paper in the UK providing over $370 million of additional liquidity;
Completed a $0.9 billion 12-month debt amortization holiday from all export-credit backed facilities;
Amended over $11 billion of commercial bank and export credit facilities to provide covenant waivers through the fourth quarter of 2021; and Further reduced operating expenses due to the fleet layup measures and actions to decrease sales, marketing and administrative expenses.
$11.3 billion of committed credit facilities that are available to fund ship deliveries originally planned through 2025.
It appears for now Royal Carribean Group (RCG) has bought themselves more time and time will tell if they need to borrow more to stay afloat. It is my hope they will not need to borrow any more funds to stay in business. Do you think these funds will be enough?