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Royal Caribbean Group amends loans and gives them more financial flexibility


Royal Caribbean filed paper work with the United States Securities and Exchange Commission (SEC) that provides the company more financial flexibility in dealing with their existing loans and obligations.

This is not the first time Royal Caribbean has made these sort of arrangements since the start of the global cruise shutdown.

Essentially, it means they have extended or delayed loans to provide more time to pay them off later without defaulting on the loans.

The Form 8-K filing has two major components, which you can read verbatim right here.

Credit Facility Amendments

On July 28, 2020, Royal Caribbean Cruises Ltd. (the “Company,” “our” and “we”) amended our $1.55 billion unsecured revolving credit facility due 2022 with Nordea Bank ABP, New York Branch, as administrative agent (the “Nordea Revolver”), our $1.925 billion unsecured revolving credit facility due 2024 with The Bank of Nova Scotia, as administrative agent (the “BNS Revolver”), and our $1.0 billion unsecured three-year term loan agreement with Bank of America, N.A., as administrative agent (the “Term Loan” and together with the Nordea Revolver and the BNS Revolver, the “Credit Facilities”).

These amendments extend our waiver of the quarterly-tested fixed charge coverage and net debt to capitalization covenants in each Credit Facility through and including the fourth quarter of 2021 and increase the monthly-tested minimum liquidity covenant for the duration of the extended waiver period. Pursuant to these amendments, the restrictions on paying cash dividends and effectuating share repurchases during the wavier period were extended through and including the fourth quarter of 2021. In addition, these amendments incorporate the restrictions on investments set forth in the indentures governing our 9.125% senior guaranteed notes due 2023, 10.875% senior secured notes due 2023 and 11.500% senior secured notes due 2025.

Certain of the lenders participating in the amended Credit Facilities, and affiliates of those parties, provide banking, investment banking and other financial services to us from time to time for which they have received, and will in the future receive, customary fees.

The foregoing description of the provisions of the amendments is summary in nature and is qualified in its entirety by reference to the full and complete terms of the amendments, copies of which are filed herewith as Exhibit 10.1, 10.2 and 10.3 and incorporated herein by reference.

Export Credit Facility Amendments

On July 28, 2020, we entered into (i) a financial covenant waiver extension consent letter with KfW IPEX-Bank GmbH to amend our Hermes backed loan facilities, including but not limited to, those incurred to finance Quantum of the Seas, Anthem of the Seas, Ovation of the Seas, Spectrum of the Seas and Odyssey of the Seas (collectively, the Hermes Facilities”) and (ii) amendments to the BpiFAE backed loan facilities incurred to finance Celebrity Edge, Celebrity Apex, and Symphony of the Seas (the “Bpi Facilities”) in each case, in order to extend the period during which a breach of the financial covenants will not trigger a mandatory prepayment or default, as applicable, under each facility through and including the fourth quarter of 2021. Similarly, on July 31, 2020, we amended the Finnvera-backed loan facilities incurred to finance Icon 1Icon 2 and Icon 3 (the “Finnvera Facilities” and together with the Hermes Facilities and the Bpi Facilities, the “Export Credit Facilities”) in order to extend the period during which a breach of the financial covenants will not trigger a default under each facility through and including the fourth quarter of 2021; provided that certain structural enhancements are provided on or before September 30, 2020. In connection with these consents and amendments, we have agreed that certain of our subsidiaries (none of which directly own a vessel) will issue guarantees for the debt outstanding under the Export Credit Facilities.

Certain of the lenders participating in the Export Credit Facilities, and affiliates of those parties, provide banking, investment banking and other financial services to us from time to time for which they have received, and will in the future receive, customary fees.

The foregoing description of the provisions of the amendments is summary in nature and is qualified in its entirety by reference to the full and complete terms of the amendments, copies of which are filed herewith as Exhibit 10.4, 10.5, 10.6, 10.7 and 10.8 and incorporated herein by reference.

The big questions for Royal Caribbean's earnings call next week


We are exactly one week away from Royal Caribbean's second quarter earnings report, and perhaps answers to many questions about the short and long term future of the cruise giant.

Earnings calls are when the executives will provide shareholders with a look at its financial situation and answer questions from analysts. With so much disruption to the entire cruise industry due to the cruise shutdown, there are plenty of ongoing concerns to address.

While we will not know exactly all topics to be covered, here are the top issues cruise fans are curious about (and Wall Street too).

How bad of a loss?

Royal Caribbean Group reported over $1 billion in losses in the first quarter of 2020, and that was just at the beginning of the cruise shutdown and global health crisis, so how bad will things be this time?

On the one hand, there have been no cruises in the second quarter at all, but on the other hand, it sounds like 2021 bookings are surprisingly high.

There is no doubt that the Royal Caribbean Group lost money in the second quarter, but was it less than analysts expected or worse?

The nature of their financial situation may be a good indication of the overall health of the company.

Any plans to sell ships?

Rival Carnival Corporation has announced it will sell over a dozen cruise ships by the end of the year, so the question is will Royal Caribbean do the same.

Carnival made announcements in its earnings call of selling ships, so the question is will Royal Caribbean do the same.

Royal Caribbean Group Chairman and CEO Richard Fain said two weeks ago there are no plans to sell ships, but it is a consideration. A swirl of rumors last week that Empress of the Seas was headed to the scrapyard turned out to be incorrect.

As we all know, these plans can change at any time, especially if the losses start adding up.

Will there be any new cost-cutting measures?

Something Royal Caribbean announced in its first quarter earnings call was a series of cost-cutting measures, and many are wondering if more are to come.

At the last earnings call, Royal Caribbean group was considering ways to further reduce the average monthly requirement under a further prolonged out-of-service scenario and during start-up of operations.

Whether that comes in the form of more layoffs, selling ships, taking out more loans, or something else remains to be seen.

Safety protocol update

The blue-ribbon panel dedicated to coming up with new policies and protocols to keep guests safe once cruising does resume is likely to be mentioned, if not talked about at length.

Since the day Royal Caribbean announced the Healthy Sail Panel, everyone has been curious what policies exactly will be put into place.

While Royal Caribbean has said the Healthy Sail Panel's first round of recommendations will not be made until the end of August, perhaps we will get insight into what they are considering or working on.

How well is the cruise line booked next year?

While 2020 has been an absolutely terrible year for Royal Caribbean (and all cruise lines), their booked position in 2021 has been a bright spot for the cruise line.

Essentially, a lot of people opted to defer their cruise vacations to next year instead of outright canceling plans, and the question is if this trend is holding up.

Wall Street has been skeptical of any cruise line's ability to lure customers back once cruises resume, so positive feedback on how 2021 (and beyond) is looking would put a lot of concerns at ease.

Royal Caribbean Group schedules conference call for business update & second quarter


Royal Caribbean Cruises Ltd. announced it has scheduled a conference call with investors to discuss its second quarter results and provide a business update.

The call is scheduled for 10am Eastern Daylight Time on Monday, August 10, 2020.

The call will be available on-line at the company's investor relations website,

To listen to the call by phone, please dial (877) 663-9606 in the US and Canada.  International phone calls should be made to (706) 758-4628. 

Inside look at how many people are still booking Royal Caribbean cruises


Despite the global health crisis, multiple rounds of cancelled cruises, and a lot of unknowns, Royal Caribbean is still seeing strong bookings, with a major rebound since the spring.

Royal Caribbean Vice President of Revenue Management Michael Goldner spoke to travel agents in a webinar on Wednesday, and went through the current booked status of the cruise line this year and next year, revealing surprisingly high booked levels.

As the global health crisis began, there was a lot of concern that bookings would plummet as the public became more and more concerned about the safety of cruising. Royal Caribbean's bookings ended up looking a lot better, as Mr. Goldner explained in the call.

As expected, bookings did take a hit in the early weeks of the pandemic, but Royal Caribbean saw bookings start to rise in April, even with new rounds of cancellations.

"Starting that second week of March, we we went through our first phase of suspended sailings. But then you can see really about mid April, we started to see some life in our bookings. There was a pause, and then we started to see the booking activity start to pick up and really have seen an improvement each and every week."

Next, Mr. Goldner took a look at bookings in 2020 versus 2021.

Not surprisingly, it is a different story between each year. The booking pace for 2020 is down, because there is less and less inventory to book with each phase of the cancellations, and there is some trepidation surrounding travel in 2020, in general.

"I think first and foremost, we have less inventory to sell this year because we have suspended, " Goldner said.  "It's hard to believe almost six months worth of sailings already. So we have less inventory to sell this year."

"And I think generally consumers are waiting. They're unsure of traveling this year. They want to know what's what the world is going to be like before they travel. They certainly want to know what the industry, the cruise industry, is going to look like in the onboard product. So it's clear that consumers are hesitant about booking this year."

Moving forward to 2021, bookings have rebounded considerably, as despite those same concerns, the public is demonstrating they want to travel again.

"We saw the same decline in bookings after the after Coronavirus started in China, the U.S. travel advisory. But we have seen each and every week our bookings increase for 2021. And I think it's for a couple of reasons."

"First is, we all know that because we've been suspending sailings, we've had many of our consumers, many of our guests, who have either lifted and shifted their booking into 2021, or they're utilizing a future cruise credit, but they are booking into next year. And that is certainly helping our booking volume."

"The majority of the business that we're getting for 2021 is new bookings, new business. And I think this bodes really well for all of us because I believe there is a lot of pent-up demand for next year."

"People are making their their bookings for next summer, and we're seeing probably the best booking activity into summer products like Europe, like Alaska, like Caribbean."


To further illustrate the strong demand for summer 2021 sailings, there has been a, "pretty significant increase in booking volume" week after week for Alaska, Europe and the Caribbean.

Mr. Goldner stressed that while Royal Caribbean is seeing a lot of bookings from guests who had cruises cancelled in 2020, the majority of business that Royal Caribbean is seeing from new bookings. 

"New bookings, new reservations, mostly, not surprisingly, but mostly from Crown and Anchor guests."

Mr. Goldner's revelation about repeat cruisers echoes what Royal Caribbean said about repeat cruiser business in May, when Royal Caribbean Cruises Ltd. Chief Financial Officer Jason Liberty touched on the subject.

"Our loyalty guests have really just been absolutely incredible in their support, and you can really see their love of cruising as they begin to want to focus further out."

Royal Caribbean International President & CEO Michael Bayley also spoke about the loyalty of cruise fans, "I think we've really seen surprising demand from our loyalty members, and remember we've got close to 20 million loyalty members. Their response to various promotions that we've put into the market, just to understand what the demand looks like is been surprisingly positive. So, as we move into Q4 and into '21, we've been honestly surprised in terms of the demand that we've seen coming in, particularly from loyalty guests."

Royal Caribbean subsidary Pullmantur Cruises to be reorganized


Pullamntur Cruises, which Royal Caribbean Cruises Ltd owns 49% of, has filed for reorganization on Monday due to the impact of being shutdown during the current pandemic.

Pullmantur's board of directors make the decision following the "unprecedented impact" made the decision necessary.

In addition, Pullmantur has cancelled all of its cruises through November 15, 2020. One option that will be offered to guests booked on affected sailings is the option to sail on other RCL brands including Royal Caribbean International and Celebrity Cruises.

The reorganization has been filed under the terms of Spanish insolvency laws.

Two former Royal Caribbean ships sail in Pullmantur's fleet, Monarch of the Seas and Sovereign of the Seas. Pullmantur indicated that all three of its cruise ships are staffed at minimum maintenance levels, and it will ensure the crew's safe return home.

In October 2019, Royal Caribbean announced Grandeur of the Seas would be transferred to Pullmantur. It is unclear if that plan will change due to this announcement.

Royal Caribbean stock joins Wall Street plunge


The stock market took a big hit on Thursday, and Royal Caribbean's stock (RCL) was no exception, falling in value by double digits.

The cruise line's stock was down 14.28% at the close of trading, finishing the day at $54.51.

Travel stocks are no stranger to these downturns in the market, as travel-related companies were sharply lower across the board. Norwegian Cruise Line Holdings Ltd (NCLH) was down 16.46% and Carnival Corp (CCL) was down 15.30%.

The Dow Jones Industrial Average saw a wide sell-off, due to fears of a COVID-19 second wave, along with a dire economic forecast by the U.S. Federal Reserve. 

Economic data appeared to back up the Fed’s dour economic projections, with jobless claims still more than double their peak during the Great Recession and continuing claims at an astoundingly high 20.9 million.

Deaths of Americans from COVID-19 could reach 200,000 in September, a grim result of the United States’ economic re-opening before getting growth of new cases down to a controllable level, according to a leading health expert.

Note: Matt Hochberg has no position in any of the stocks mentioned, nor does he own any cruise line stock.

Royal Caribbean announces pricing for its $2.0 billion of bonds


Royal Caribbean Cruises Ltd. announced on Friday that it has priced its concurrent private offerings of $1.0 billion aggregate principal amount of 9.125% Senior Guaranteed Notes due 2023, and $1.0 billion aggregate principal amount of 4.250% Convertible Senior Notes due 2023.

The Senior Notes will mature on June 15, 2023. The Senior Notes will be fully and unconditionally guaranteed on a senior unsecured basis by a newly formed, direct wholly owned subsidiary of the Company that will own all the equity interests in the Company's subsidiaries that own seven of the Company's vessels. 

The Convertible Notes will mature on June 15, 2023, unless earlier converted, redeemed pursuant to a tax redemption or repurchased. The initial conversion rate per $1,000 principal amount of Convertible Notes is 13.8672 shares of common stock of the Company, which is equivalent to an initial conversion price of approximately $72.11 per share, subject to adjustment in certain circumstances. The initial conversion price represents a conversion premium of approximately 25.00% to the last reported sale price of $57.69 per share of the Company's common stock on The New York Stock Exchange on June 4, 2020.

The Convertible Notes will be convertible at the holder's option in certain circumstances. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, at its election, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock. The Convertible Notes will not be guaranteed by any of the Company's subsidiaries.

In connection with the offering of the Convertible Notes, the Company granted certain of the initial purchasers of the Convertible Notes a 13-day option to purchase up to an additional $150.0 million aggregate principal amount of the Convertible Notes. The Notes are expected to be issued on or around June 9, 2020, subject to customary closing conditions. The closing of each of the Senior Notes offering and the Convertible Notes offering is not contingent upon the closing of the other offering.

The Company expects to use the combined net proceeds from the offerings of the Notes for general corporate purposes, which may include the repayment of indebtedness.

Royal Caribbean offers up to $2 billion in bonds and convertible bonds that mature in 2023


Royal Caribbean announced on Thursday it is offering up to $2 billion in senior notes and convertible bonds that mature in 2023 in two separate offerings. 

The company said in a statement it will use the proceeds for "general corporate purposes", which may include repaying debt.

The Senior Notes will be fully and unconditionally guaranteed on a senior unsecured basis by a newly formed, direct wholly-owned subsidiary of the Company that will own all the equity interests in the Company’s subsidiaries that own seven of the Company’s vessels with an aggregate net book value of approximately $7.7 billion. The Convertible Notes will not be guaranteed by any of the Company’s subsidiaries.

Wall Street: Royal Caribbean's revenue will take years to recover


You do not need to study business to know the impact of Royal Caribbean shutting down all of its cruise ships and halting all cruises for months will have a long term impact on the company's bottom line, but one analyst provided some context into what the future might hold.

Faizan Farooque is a contributing author for, and recently wrote about how much time Royal Caribbean Cruise Ltd (NYSE: RCL) will need to recover from its current financial 

Prior to the shutdown, cruise line revenues were steadily rising, and new bookings were at equally impressive. Then the voluntary global cruise shutdown occurred, and just in the first quarter of 2020, the cruise line took over $1 billion in losses.

Even once cruises resume, revenues are expected to take massive hits this year and the next.

Source: Chart by Faizan Farooque, data from S&P Global Market Intelligence

Wall Street expects RCL will finish 2020 with $3.83 billion in revenue, which is down 65% compared to 2019. Analysts believe things will improve in 2021, with an estimate of $8.73 billion in revenue. That estimate is still down from the $11 billion in revenue the company had in 2019.

While the RCL stock is down significantly compared to the start of 2020, it has seen a resurgence lately, rising over 30% in the last month.

Note: Matt Hochberg has no position in any of the stocks mentioned, nor does he own any cruise line stock.

Royal Caribbean stock on rebound since latest round of cancellations


If you purchased Royal Caribbean stock in the early months of the economic downturn, the last week has likely been a welcome sight.

Royal Caribbean's stock price (NYSE: RCL) has been shooting up over the last week, with the entire travel industry seeing big gains as investors see a near-term economic recovery. This hope has many believing a return to pre-shutdown prices could be on the horizon.

Royal Caribbean's stock price closed at $54.29 at the end of trading on Wednesday, marking a 9.54% gain on the day. After trading on Tuesday, the stock was up 14%, that followed a bounce back at the end of last week.

The cruise line's stock has been shooting upwards for the last week, beginning on the day when the cruise line announced over $1 billion in losses and another round of cancelled cruises through August.

The recent trend is great news for the cruise line, who has seen giant losses in its stock price following a wave of bad press related to cruise ships, and trepidation in the market regarding the future of travel.

Royal Caribbean's current plan is to resume sailings on August 1, with China sailings perhaps starting up in July.

Note: Matt Hochberg has no position in any of the stocks mentioned, nor does he own any cruise line stock.