Royal Caribbean Group unveiled plans Tuesday to raise $1 billion in new capital, the latest effort by a cruise operator to shore up liquidity as business remains sharply curtailed by the pandemic.
Royal Caribbean (ticker: RCL) said it has launched a private offering of $500 million in senior convertible notes due 2023, with a purchaser option to buy an additional $75 million of the convertible notes. It has also launched a public offering of $500 million shares of common stock, with an underwriter option to buy $75 million in additional shares.
Shares of all three major U.S. cruise operators were lower after the news. Royal Caribbean was down 10.9%, at $62.19, in recent trading, while rival Carnival (CCL) was off 6.5%, at $14.22, and Norwegian Cruise Line Holdings (NCLH) was down 6.9%, at $16.83. Year to date, all three stocks are down 53% to 72%.
All three cruise operators have been largely sidelined by the pandemic and have been burning through hundreds of millions of dollars a month. Carnival, for its part, has raised more than $10 billion in capital, mostly in debt, to help it weather the crisis.
U.S. ports remain under a no-sail order by the Centers for Disease Control and Prevention that is set to expire Oct. 31. However, in a recent extension of the order, the CDC was circumspect about the safety of cruising during the pandemic. “Recent outbreaks on cruise ships overseas provide current evidence that cruise ship travel continues to transmit and amplify the spread of [Covid-19]—even when ships sail at reduced passenger capacities—and would likely spread the infection into U.S. communities if passenger operations were to resume prematurely in the United States,” the CDC said.
News of the capital raising also comes as Johnson & Johnson (JNJ) paused its Covid-19 vaccine trial, underscoring the uncertainty surrounding the pandemic and casting doubt on when cruise operators might see a vaccine that could assuage passenger concerns of contracting the coronavirus.
Even so, while sailings are mostly canceled through year’s end, the cruise operators have pitched dozens of health and safety protocols aimed at resuming cruising even without a vaccine.
Write to Brian Hershberg at firstname.lastname@example.org