[ad_1]
Text size
Carnival’s Ecstasy cruise ship, shown docked at the port of Jacksonville amid the coronavirus outbreak in late March.
Sam Greenwood / Getty Images
Two of the three major US cruise operators announced capital increases this week, the latest in a series of similar moves in recent months as they have been largely ruled out by the pandemic since March.
Carnival
(ticker: CCL), the world’s largest cruise line, plans to use about $ 1 billion in shares it announced on Tuesday to alleviate its growing debt. He will swap debt for equity.
Norwegian Cruise Line Holdings
(NCLH), the smallest of the major U.S. cruise lines, said in a statement Tuesday that its offer was for 40 million shares at $ 20.80, for a total of around $ 830 million. A company spokesperson said Wednesday morning that he planned to use it for “general business purposes.” Norwegian’s monthly cash consumption in the third quarter averaged around $ 150 million.
Stocks were mixed at the start of trading on Wednesday as the S&P 500 was flat. Carnival’s stock was at $ 18.10, up slightly after declining previously. Norwegian stocks were at $ 20.73, down about 6%.
Carnival’s deal, announced Tuesday and expected to close by the end of the week, is to offer 57.4 million shares at $ 18.05, just around the current price.
Carnival said in a statement that it has evaluated the offer “to a limited number of holders” of its senior convertible debt which has a coupon of 5.75%.
The company’s indebtedness increased during the pandemic, which ended most of its operations, with the exception of some Mediterranean cruises.
As of August 31, at the end of the company’s third quarter, its long-term debt stood at $ 18.9 billion, compared to $ 9.7 billion at the end of its prior year on November 30, 2019. The company said in a filing that its average monthly cash consumption in the third quarter was $ 770 million, and it expects it to fall to $ 530 million per month in the current quarter.
While the extra shares will help pay off some of the debt, it will increase the number of shares, diluting existing shareholders.
It remains to be seen as the Carnival and its peers, including
Royal Caribbean Group
(RCL), will resume navigation outside American ports.
On October 31, the Centers for Disease Control and Prevention issued a conditional navigation order, having previously banned cruises since mid-March.
This includes mock testing “the ability of a cruise ship operator to mitigate COVID-19 on cruise ships,” according to the federal agency.
Write to Lawrence C. Strauss at [email protected]
[ad_2]
Source link