Cruise line offers 28 ships as collateral

Royal Caribbean Cruises launched a $3.3B bond offering May 13 by pledging 28 of its ships as collateral and forecast heavy losses for the first quarter as the COVID-19 pandemic has brought business to a standstill. Royal Caribbean, which was forced to suspend its cruises globally and cut about 26 percent of its U.S. workforce, said the health crisis has dented its first-quarter net income by about $453M. The cruise operator’s shares have sunk over 72 percent this year. RCC expects to report a preliminary first-quarter net loss of $1.44B. The firm is preparing to write down the value of its Silversea Cruises unit and several ships by $1B-to-1.3B. Last year’s 1Q profit was $249.7M. RCC will use the new private note offering to repay a $2.35B, 364-day term loan agreement with Morgan Stanley. Royal Caribbean declined to specify which ships it had pledged for its debt offering. It had vessels with a net book value of about $22.7B at the end of 2019, including the world’s largest cruise ship, Symphony of the Seas. RCC estimates its cash burn to be up to as much as $275M per month during the prolonged suspension of operations. (Source: Marine Link 05/13/20) Gulf Coast Note: RCC had been offering cruises aboard the Majesty of the Seas cruise ship from New Orleans to the Bahamas and Western Caribbean. https://www.marinelink.com/news/royal-caribbean-pledges-ships-collateral-478467?utm_source=MT-ENews-2020-05-13&utm_medium=email&utm_campaign=MT-ENews