The brokerage said that is prompting RCL to 'prudently proactively explore additional capital.' Bloomberg reported the RCL item on Wednesday.
NCLH and Goldman Sachs
This follows a Reuters report last Friday that Norwegian Cruise Line Holdings had engaged Goldman Sachs to look at additional financing options that could include selling a stake via a private investment in public equity (PIPE).
PIPE involves an institutional or other type of accredited investor buying stock directly from a public company at below the market price.
RCL's potential options
Addressing RCL specifically, Wells Fargo recounted that on March 23, the company entered into a $2.2bn, 364-day secured term loan that can be extended another 364 days at RCL's election. This meant the company had more than $3.6bn of liquidity with a cash burn of approximately $400m per month under a 'no sail' scenario through year's end, Wells Fargo analyst Tim Conder said.
Conder believes RCL had about $300m of secured borrowing capacity left, but left some asset base cushion for potential write-downs. He suggested additional RCL capital raise would likely take the form of limited secured bonds and convertible bonds, all potentially supplemented by private equity placement.
Possible COVID-19 second wave
As for the industry's return to service and the brokerage's forecast of a best-case only 25% to 30% of capacity sailing in the second half, Wells Fargo cited concerns about a potential second wave of COVID-19 in late summer, particularly fall/winter, along with the current US 'no sail' order that could extend into mid-July.
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