Posted on 03/05/2021 10:00:08 AM PST by Capt. Tom
Cruise ship operator Norwegian Cruise Line Holdings (NYSE: NCLH) sought to take advantage of a rebound in its stock price with a public offering of 47.58 million shares.
The cruise operator's ships are still stuck in port, but its stock has quadrupled from its year-ago low point on hopes of returning to the high seas soon. Shares have nearly doubled in the past six months and are up 50% over the past month.
Yet because Norwegian priced its offering at $30 a share, an almost 10% discount to where shares had closed the day before, the cruise line stock was sinking 11% on the news.
Norwegian says it plans to use the proceeds from the offering to repurchase debt issued by a subsidiary that's due in 2026. The notes were issued last May by L Catterton in a private placement in the amount of $400 million. L Catterton is the world's largest consumer-focused private equity firm.
The notes were issued as Norwegian came to grips with the COVID-19 pandemic, a crisis that caused it to subsequently take on billions of dollars of debt to stay afloat.
Norwegian's debt load ballooned to over $11.6 billion, though it also has over $3.3 billion in cash. That should keep it operational until it finally gets the green light from health authorities to begin sailing again.
(Excerpt) Read more at nasdaq.com ...
That last paragraph in the article is not very encouraging to me.
Relying on our CDC could put you in bankruptcy.
IMHO Cruise lines are operating like our country does, borrowing money without the income to pay it back.
The big differences is when our creditors want their money payed back, our country has bigger guns and printing presses. A Cruise line doesn't have those two things.
So their fate in this country, is in the hands of our CDC, and the Biden Group , and Socialist politicians. -Tom
Just another example of why no one can predict the stock market and certainly not on a short term basis.
Analysts had just raised the price target for this stock a day ago, then it sunk 15% today on this news.
Best example of the risk in stocks: Covid.
But over the long term nothing has beaten investing in the American economy and markets.
The difference between our country and cruise lines: The cruise lines are sidelined right now but they actually provide a service and earn money when they are allowed to.
Hidden in your post is the truism of not betting on the market. Invest in good companies.
Biden will bail them out via Iran.
But over the long term nothing has beaten investing in the American economy and markets.
I have felt for decades that there is no direct relationship between the stock market and the economy. -Tom
If/when the cruise lines go down, the banks might go with them, at least for the 11 Billion or so. It's like holding the mortgage on a gas station with a huge fuel leak remediation issue - who wants it?
“One thing the cruise lines have in their favor is that the debt held by the lenders is probably mostly secured by the ships themselves. If the big cruise lines go under, those large cruise ships drop in value to what? It’s not like there is a large market for large ships with all of the infrastructure in place that they have. snip...”
I totally agree with that. These second hand cruise ships are “white elephants.” Mainly because all the cruise lines worldwide are all in the same situation now, and need to downsize.
These second hand cruise ships are going for low prices.
see the link below:
https://www.cruiseindustrynews.com/cruise-news/23829-here-s-what-an-entire-cruise-fleet-sold-for-at-auction.html
The newer ships won’t bring in enough money to pay back the Billions borrowed.
Even Billionaires don’t want to get involved with them as a private yacht. -Tom
When they resume operation the cruise companies are cash machines.
When they resume operation? When is that?
It looks like it will be 2022. A long time to drift further into debt.
And the countries economy will be a factor.
Our CDC hasn't yet come up with the protocols yet, for test cruises. The Cruise lines will have to start out with reduced passengers. And the vaccine requirement hasn't been decided .
Onerous protocols to sail will reduce the number of passengers who go on cruises.
IMHO the Cruise Lines are not going to make the money they were making before the shutdown. - Tom
Stock chart for: NCLH
https://finance.yahoo.com/quote/NCLH?p=NCLH
Friday had a big drop.
Read later.
Best time to make money in stocks is when bad news knocks it down. Best time to sell a stock is when good news comes out.
Best trade I ever made was last March 2020, when I jumped in with all the spare cash I could muster. News was very bad about covid-19. Now people have realized covid-19 was not the monster the media was portraying it to be. After the vaccines came out stocks went up more. I will sell now after 1 year holding period to pay tax at lower rates and the good news is out. 50%+ profit in 1 year is the most I ever made in one year in the relative safety of index funds.
As for future of cruise industry, I am 99.99% certain it will come back with a vengeance. It is an amazing value for a carefree, crime free, stress free, 5***** holiday. Covid-19 will be around for many years but with the vaccine, it will not be a big impact on the economy.
“As for future of cruise industry, I am 99.99% certain it will come back with a vengeance. It is an amazing value for a carefree, crime free, stress free, 5***** holiday. Covid-19 will be around for many years but with the vaccine, it will not be a big impact on the economy.”
One of the additional problems the cruise lines have right now is when they went from a profitable business into debt, the outsiders with money in the game are now telling them how to run their cruise line companies.
You can see that in the article below.-Tom
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.