Royal Caribbean Cruises( NYSE: RCL) revealed today that it was offered a new $700 million term loan from Morgan Stanley( NYSE: MS) that will assist keep it afloat till it has the ability to head back out to sea.
The cruise ship operator has stopped briefly all cruises from the majority of ports till November. With little cash being available in and significant expenses still to pay, Royal Caribbean has been burning through between $250 million and $290 million a month.
Yet with $4.1 billion in liquidity since completion of June, after loaning another $2 billion, and having financial obligation maturities of just $300 million this year (but $1.3 billion in 2021) the cruise line still looks seaworthy.
Image source: Getty Images.
Sailing on rough seas
Royal Caribbean said it has up until Aug. 21, 2021 to make use of the new term loan, and when tapped, it will bear interest at LIBOR plus 3.75%with maturity 364 days thereafter.
The cruise liner business has been stuck in port considering that the COVID-19 pandemic swept the globe. Practically half of its consumers for cruises that were canceled have asked for cash refunds of their deposits rather than a credit or rebooking under its “Lift & Shift” program, which gives them passage on the exact same cruise line next year.
Around 60%of the bookings for 2021 are brand-new with the rest originating from Lift & Shift. That, however, is affecting pricing, lowering rates to even with this year. If consumers selecting to rebook were left out, prices would be somewhat higher.
Royal Caribbean’s stock has actually tripled off its March lows, however still stays 56?low where it began2020 With shares trading under $60 each, Wall Street analysts are pegging their price targets for the stock in the high-$60 to mid-$70 range.
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Rich Duprey has no position in any of the stocks mentioned.