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Carnival Slips on Share Sale Plan Amid Ongoing COVID-19 Struggles

Strategic Insights

— 1 min read

Carnival, the struggling cruise ship operator, has seen its shares slip 6.5% to $26.31 after announcing plans to sell up to $500 million of shares. The company cites the ongoing impact of the COVID-19 pandemic as a major reason for the sale, stating that it may be out of compliance with debt covenants by November 2022. The company aims to use the funds to purchase shares of its UK-traded affiliate, Carnival Plc, and for general purposes. This move comes as the cruise industry continues to grapple with the pandemic's effects, with operators like Royal Caribbean and Norwegian Cruise Line Holdings also experiencing declines.

Key Takeaways:

  • Carnival intends to sell up to $500 million of shares to purchase ordinary shares of Carnival Plc and for general purposes.
  • The company may be out of compliance with one or more maintenance covenants in certain debt facilities by November 2022.
  • COVID-19 has had a significant impact on Carnival's financial condition and operations, affecting its ability to obtain acceptable financing.
  • The company has raised over $2.5 billion by selling shares over the past year due to pandemic-related travel restrictions.
  • Carnival plans to return all 91 of its ships to the water by next spring and resume cruises in July, including Alaska voyages.

Statistics:

  • Carnival's shares have declined 6.5% to $26.31 after the announcement.
  • The company aims to sell up to $500 million of shares.
  • Carnival may be out of compliance with debt covenants by November 2022.
  • The company has raised over $2.5 billion by selling shares over the past year.
  • Carnival plans to return 91 ships to the water by next spring.
  • The company will resume cruises in July, including Alaska voyages.

Sources:

  • TheStreet (https://www.thestreet.com/markets/stock-market-today-dow-jones-nasdaq-062821)
  • TheStreet (https://www.thestreet.com/investing/carnival-wants-all-ships-on-the-water-by-next-spring)
  • TheStreet (https://www.thestreet.com/investing/carnival-corp-confirms-july-cruise-relaunch-shares-jump)
  • TheStreet (https://www.thestreet.com/investing/carnival-to-resume-alaska-cruises-in-july)

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