Carnival shares tumble as group looks to raise $1bn to make debt payments and for ‘general corporate purposes’

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  • Carnival Corp plans to raise $1 billion with convertible senior bonds
  • The cruise group’s share price is down more than 13% this morning.

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Cruise group Carnival Corp has seen its share price plummet after announcing it plans to raise $1 billion in convertible senior bonds.

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On Wednesday, he told investors that the proceeds from the offering would be used for “principal repayments 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 of each year, beginning June 1, 2023, at a rate of 5.75% per annum.

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Equity impact: Carnival’s share price plummets on Wednesday

carnival promotions fell 14.46%, or 122.00 pence, to 721.80 pence this afternoon, down more than 50% over the past year.

Convertible bonds mature on December 1, 2027, unless they have been previously redeemed, redeemed or converted.

The Group stated: “The Company intends to provide original purchasers of the convertible notes with a settlement option within a 13-day period from the first day of the convertible notes issue up to an additional $150 million of the aggregate principal amount of the convertible notes.”

Convertible bonds are only offered to people “reasonably deemed to be qualified institutional purchasers” under Rule 144A of the Securities Act of 1933.

Carnival in September forecasts fourth-quarter loss after it reported third-quarter results that fell significantly short of forecasts as higher fuel prices and cheaper fares offset increased bookings.

High inflation has hit many cruise operators, which have been losing money since the pandemic hit in 2020.

They are being hampered by Covid-19 lockdowns, cruise bans, safety concerns, and labor shortages. However, travel is bouncing back as people look to take vacations amid the easing of restrictions caused by the pandemic.

Stock drop: Carnival's share price has plummeted over the past 12 months.

Stock drop: Carnival’s share price has plummeted over the past 12 months.

In September, Carnival boss Josh Weinstein said: “Since we announced a relaxation of our protocols last month, we have seen a significant improvement in booking volumes and are now well 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 in the third quarter of 2022 was down from a strong pre-pandemic 2019.”

The cruise operator said it expects eight of its nine brands to fully serve passengers by the end of the fourth quarter of this year. The company said it also expects price increases in 2023.

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