|
Related Topics
|
Category: Stock Market and Royal Caribbean Cruises
Date: 13 May 2020 Stock Price: $34.62 Royal Caribbean Cruises a global cruise vacation company that operates a total of 61 ships and has an itinerary across all 7 continents issued a release stating that they are proposing to issue $3.3 billion in secured notes. The company and its stock price has been hit hard by the global coronavirus pandemic.
The Company expects to use the net proceeds from the offering of the Notes to repay its $2.35 billion 364-day senior secured term loan agreement with Morgan Stanley Senior Funding, Inc. " |
About Royal Caribbean Cruises
Royal Caribbean Cruises Ltd. (NYSE: RCL) is a global cruise vacation company that controls and operates four global brands: Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises. We are also a 50% joint venture owner of the German brand TUI Cruises and a 49% shareholder in the Spanish brand Pullmantur Cruceros. Together these brands operate a combined total of 61 ships with an additional 17 on order as of December 31, 2019. They operate diverse itineraries around the world that call on all seven continents.
The release as obtained from Royal Caribbean Cruises
MIAMI, May 13, 2020 /PRNewswire/ -- Royal Caribbean Cruises Ltd. (NYSE: RCL) (the "Company") today announced that it has commenced a private offering of senior secured notes to be issued by the Company in separate series of notes due 2023 and 2025 (together, the "Notes"), for an aggregate principal amount of $3.3 billion.
The Notes and the related guarantees will be secured by 28 of the company's vessels and material intellectual property of the company. The obligations under the Notes and the related guarantees will be secured by the collateral in an amount not to exceed permitted capacity under the company's existing indebtedness.
The Company expects to use the net proceeds from the offering of the Notes to repay its $2.35 billion 364-day senior secured term loan agreement with Morgan Stanley Senior Funding, Inc., as the administrative agent and collateral agent and the other lenders party thereto entered into on March 23, 2020. The Company expects to use the remainder net proceeds for general corporate purposes, which may include repayment of additional indebtedness.
Nothing contained herein shall constitute an offer to sell or the solicitation of an offer to buy any security. The Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States, only to certain non-U.S. investors pursuant to Regulation S. The Notes will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
The Notes and the related guarantees will be secured by 28 of the company's vessels and material intellectual property of the company. The obligations under the Notes and the related guarantees will be secured by the collateral in an amount not to exceed permitted capacity under the company's existing indebtedness.
The Company expects to use the net proceeds from the offering of the Notes to repay its $2.35 billion 364-day senior secured term loan agreement with Morgan Stanley Senior Funding, Inc., as the administrative agent and collateral agent and the other lenders party thereto entered into on March 23, 2020. The Company expects to use the remainder net proceeds for general corporate purposes, which may include repayment of additional indebtedness.
Nothing contained herein shall constitute an offer to sell or the solicitation of an offer to buy any security. The Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States, only to certain non-U.S. investors pursuant to Regulation S. The Notes will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
Royal Caribbean Cruises (NYSE:RCL) stock vs Carnival (NYSE:CCL) stock
The image below shows the stock price performance of Royal Caribbean Cruises over the last 3 years compared to that of Carnival. And as the image show RCL is not alone when it comes to significant stock price declines since the coronavirus pandemic hit the travel and leisure industry.
Over the last 3 years, Royal Caribbean Cruises stock has declined by -68.82% while the stock of Carnival has declined by -80.88% over the same period. And the bulk of these declines were recorded since the start of 2020, when news broke about the spread of coronavirus in China and on various cruise ships. World wide travel bans have seen the demand for RCL and CCL products plummet which has seen the groups struggle to survive
Our last stock valuation of Royal Caribbean Cruises (NYSE: RCL)
So what do we value Royal Caribbean Cruises at based on their latest earnings report and their fiscal guidance provided? Based on their earnings report and the guidance provided especially considering global events affecting them such as the wildfires in Australia and the Coronavirus from Wuhan. Based on their earnings report our valuation model provides a target price (full value) price for Royal Caribbean Cruises at $128.90 a stock. We therefore believe the stock of Royal Caribbean Cruises is slightly undervalued
We usually recommend that long term fundamental or value investors look to enter a stock at at least 10% below our target price, which in this case is $128.90, so we would suggest looking to enter into the stock of Royal Caribbean Cruises at $116 or below.
We expect the stock of Royal Caribbean to pull back a bit at first following investors concerns regarding the Coronavirus but the stock should recover from this relatively quickly if the virus is continued quickly enough.
We usually recommend that long term fundamental or value investors look to enter a stock at at least 10% below our target price, which in this case is $128.90, so we would suggest looking to enter into the stock of Royal Caribbean Cruises at $116 or below.
We expect the stock of Royal Caribbean to pull back a bit at first following investors concerns regarding the Coronavirus but the stock should recover from this relatively quickly if the virus is continued quickly enough.
Next earnings release of Royal Caribbean Cruises
It is expected that Royal Caribbean Cruises 1st quarter 2020 fiscal year earnings report will be released in early May 2020