Carnival shares tumble after cruise group unveils plans to raise $1bn to pay off debt and for ‘general corporate purposes’
- Carnival Corp plans to raise $1 billion with senior convertible bonds
- The cruise group saw its share price drop more than 13% earlier this morning
Cruise group Carnival Corp saw its share price plummet after revealing plans to raise $1 billion with senior convertible notes.
He told investors on Wednesday that proceeds from the offering would be used to “make debt principal payments and for general corporate purposes.”
The convertible bonds, which are part of the group’s refinancing plan, will bear interest on June 1 and December 1 of each year, starting June 1, 2023, at the rate of 5.75% per annum.
Stock market impact: Carnival saw its stock price drop sharply on Wednesday
Carnival shares fell 13.06% or 110.20p to 733.60p this morning, after falling nearly 50% last year.
Convertible bonds will mature on December 1, 2027, unless redeemed, redeemed or converted earlier.
The group said: “The Company intends to grant initial purchasers of the Convertible Notes an option to purchase, for settlement during a period of 13 days commencing and including the first day of issuance of the Convertible Notes, until to an additional $150 million aggregate principal amount of convertible bonds.
Convertible Notes are only offered to persons “reasonably considered to be qualified institutional purchasers”, based on Rule 144A under the Securities Act of 1933.
In September, Carnival forecast a fourth-quarter loss after reporting third-quarter results well below expectations as higher fuel prices and cheaper fares offset an increase in bookings.
High inflation has hit many cruise lines who have been operating at a loss since the pandemic took hold in 2020.
They have been hampered by Covid-19 lockdowns, cruise bans, security concerns and labor shortages. That said, travel is rebounding as people look to go on vacation amid the lifting of pandemic-related restrictions.
Stock drop: Carnival has seen its stock price drop sharply over the past 12 months
In September, Carnival boss Josh Weinstein said: “Since announcing the relaxation of our protocols last month, we have seen a significant improvement in booking volumes and are now significantly ahead of the high levels of 2019. .
“The company said revenue increased nearly 80% in the third quarter of 2022 compared to the second quarter of 2022, but revenue per cruise passenger day for the third quarter of 2022 was down from a strong pre-pandemic 2019.”
The cruise line said it expects eight of its nine brands to have their entire fleet serving passengers by the end of the fourth quarter of this year. The company said it also expects a price increase in 2023.