Cruise line operator Carnival Corporation is knocking on doors of capital markets to get at least $6 billion in cash, the biggest measure yet of investor willingness to fund coronavirus-ravaged industries.
The business is turning to bond holders on both corners of the Atlantic with a sale in US dollars and euros of around $6 billion in equities and bonds. A first-priority claim on the company's properties such as its vessels and intellectual property would protect the new bonds, which mature in three years.
The dollar-denominated part is sold with a coupon of at least 12.5 percent and the entire deal could be raised to $4 billion, according to people with knowledge of the matter.
The firm said it expects to sell $1.25 billion in stock on Tuesday, $3 billion in secured notes and $1.75 billion in convertible bonds all due for 2023.
Carnival's stock fell after the announcement by around 15 percent in pre-market trade, but recovered after the opening of sessions, rising at midday by more than 9 percent.
"We can't tell when all of our boats will start sailing again and ports will reopen to our vessels," Carnival disclosed in a Securities filing.
The company felt the ill effects of the virus and said it would continue to have a significantly adverse impact on the financial situation and operations of Carnival, hampering its capacity to secure sufficient funding to cushion any potential cash deficits from operations.
The cruise line firm is capitalizing on the rising demand from investors, which in the past week saw more than $200 billion in debt sales in the US and Europe. Others, including Sysco Corp. and YUM! Brands Inc., provided the appeal of investors with higher premiums.
The company's stock has cratered from January 1 to about $14 per share by around 75 percent. Carnival also announced late Tuesday it is stopping shareholders' dividend payments.
Carnival drew down its $3 billion revolving credit line completely on March 13. Moody's and S&P Global downgraded Carnival's debt rating earlier this month and put the company under consideration for further downgrade, which would make it more costly for the cruise liner to raise funds.
Bank of America Corp, JPMorgan Chase & Co., and Goldman Sachs Group Inc. are leading the sale of bonds that is scheduled to be completed Wednesday. Bloomberg previously reported that Carnival had been in talks with major finance institutions to raise as much as $7 billion through equity and debt to shore up its finances.
