RCL is working on additional secured lending capacity and finalizing some debt deferrals and an updated newbuild timeline — elongated a likely six to 12 months, according to a Wells Fargo note.
Enough to weather no-sail scenario through next year
Analyst Tim Conder surmised RCL will look to raise $3.5bn to $4.25bn to refinance some existing debt and weather a potential no-sail scenario through the end of 2021. He expects the company will look to use senior secured debt, convertible debt and equity.
In recent days, RCL provided a business update and amended two unsecured revolving credit facilities ($1.55bn due 2022 with Nordea Bank New York Branch, and $1.925bn due 2024 with The Bank of Nova Scotia), along with a three-year unsecured term loan to waive covenants through first quarter 2021, subject to a new minimum liquidity covenant. As well, the company announced a delay of its first quarter 10-Q filing by up to 45 days (potentially until late June).
RCL's average monthly cash burn is $250m to $270m. The company currently has $2.45bn of liquidity, implying nine to 10 months at the cash burn midpoint, Conder said.
Current liquidity seen as adequate for six to 6.5 months
Assuming about $1.75bn of the $2.4bn in customer deposits (at March 31) relate to 2020 and are redeemed at a 45% rate, implies $790m of potential refunds or $1.65bn of net liquidity, or six to 6.5 months, he continued.
Wells Fargo rates RCL 'overweight' (buy).