“This wasn’t mentioned in the article, but most of the cash on hand amounts listed is new debt... the whole industry is insolvent... even before accounting for the future downward revisions to come on their ship values.”
‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’
Take a look at the prices for these older and smaller cruise ships and estimate what the newer bigger ships might go for in a distressed sale.
I am sure the creditors who have these ships for collateral are doing just that now, and have revised the collateral value down. -Tom
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Here’s What an Entire Cruise Fleet Sold for at Auction
November 08, 2020 excerpt Cruise Industry News....
The Cruise & Maritime Voyages fleet auction is over, with five ships heading to new owners or to scrap, and the values have finally been revealed as buyers were able to get cruise ships for pennies on the dollar during the sealed bidding process.
The Results:
Vasco Da Gama
Built: 1992
Tonnage: 55,451
Capacity: 1,258 Guests
Buyer: Mystic Invest
Sales Price: $10,187,000
Columbus
Built: 1988
Tonnage: 63,500
Capacity: 1,400 Guests
Buyer: Seajets
Sales Price: $5,321,000
Astor
Built: 1987
Tonnage: 20,704
Capacity: 650 Guests
Buyer: Projected to be scrapped
Sales Price: $1,710,000
Magellan
Built: 1985
Tonnage: 46,052
Capacity: 1,452 Guests
Buyer: Seajets
Sales Price: $3,431,000
Marco Polo
Built: 1965
Tonnage: 22,000
Capacity: 820 Guests
Buyer: Projected to be scrapped
Sales Price: $2,770,000
The new creditors have undoubtedly placed their liens in a superior position to old debt, or they wouldn’t be putting up their/their investors money. For stock holders, a negative equity/insolvency with low odds of a fast, huge operational turnaround is a bad bet at anything near current prices.