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Carnival shares tumble after cruise group reveals plans to raise $1 billion to pay debt and for ‘general corporate purposes’
- Carnival Corp plans to raise $1 billion in senior convertible notes
- The cruise group saw its share price fall by more than 13% earlier this morning
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Cruise group Carnival Corp has seen its share price fall sharply after revealing it plans to raise $1 billion in senior convertible notes.
It told investors Wednesday that the proceeds from the offering would be used to make “services of debt and for general corporate purposes.”
The convertible bonds, which are part of the group’s refinancing plan, will pay interest on June 1 and December 1 each year from June 1, 2023, at a rate of 5.75 percent per annum.
Share Impact: Carnival saw its share price fall sharply on Wednesday
Carnival shares fell 13.06 percent or 110.20 p this morning to 733.60 p, after falling nearly 50 percent over the past year.
The convertible bonds mature on December 1, 2027, unless previously repurchased, redeemed or converted.
The group said: ‘The Company intends to grant the first purchasers of the Convertible Bonds a purchase option, for settlement during a period of 13 days commencing on and including the first day the Convertible Bonds are issued, up to an additional $ 150 million aggregate principal amount of convertible bonds.”
The convertible bonds are being offered only to people “reasonably believed to be qualified institutional purchasers,” in accordance with Rule 144A under the Securities Act of 1933.
In September, Carnival forecast a fourth-quarter loss after reporting third-quarter results that fell far short of forecasts as higher fuel prices and cheaper fares offset an increase in bookings.
High inflation has hit many cruise operators that have been running at a loss since the 2020 pandemic broke out.
They are hampered by Covid-19 lockdowns, cruise bans, safety issues and labor shortages. That said, travel is bouncing back as people look to vacation amid the lifting of pandemic-induced restrictions.
Stock slump: Carnival has seen its share price plummet over the past 12 months
In September, Carnival boss Josh Weinstein said, “Since we announced the relaxation of our protocols last month, we have seen a significant improvement in booking volumes and are now significantly ahead of the strong levels seen in 2019.
The company said Q3 2022 revenue is up nearly 80 percent compared to Q2 2022, but revenue per passenger cruise day for Q3 2022 is down compared to a sharply pre-pandemic 2019 .’
The cruise line said it expects eight of its nine brands to serve their entire fleet of passengers by the end of the fourth quarter of this year. The company also said it expects prices to rise in 2023.