Carnival (CCL) has launched an emergency fundraising drive after pausing its cruise holidays in response to the coronavirus outbreak, which has prompted legal action from some of its passengers.
The cruise operator will look to raise $6bn (£4.85bn) via a combination of $3bn of three-year bonds, $1.75bn of bonds that are convertible into shares and $1.25bn of new shares. The three-year bonds will be secured against some of Carnival’s ships.
It is the first time that Carnival has been forced to halt its entire global cruise operation. In a warning issued last month, the company said that the impact of coronavirus “may continue well beyond” the containment of the outbreak and expects to register a net loss for its year ending 30 November 2020. Beyond its own internal action, Carnival has also been restricted by global port closures and travel limits.
Carnival has been subject to lawsuits from passengers aboard its Grand Princess ship in February and anticipates further legal action. The company acknowledged negative media attention stemming from passenger illness and loss of life, and is wary of the resulting consequences for its brand and demand for cruise travel.
On 13 March, Carnival fully drew down its $3bn borrowing facility. Ratings agencies S&P and Moody’s downgraded Carnival’s long-term issuer and senior unsecured debt ratings last month. Moody’s lowered the company’s senior unsecured rating twice in March, taking it down to Baa3 on the same day that Carnival announced its fundraising plans. Baa3 is Moody’s lowest investment grade rating and is one notch above ‘junk’ status.
