Possible Bankruptcy??

[Janet76]

With Saudi backing, CCL is safe for now.  

[bluesea321]

20 hours ago, Mackenzie1 said:

Here is some hope:  Saudi Arabia takes a stake in Carnival Cruises:

https://www.businessinsider.com/saudi-arabias-sovereign-wealth-fund-buys-a-stake-in-carnival-2020-4

 

Yes there is some hope but putting the investment into context, the Saudi Sovereign Fund holds $400 billion in assets and they purchased $350 million of CCL stock, i.e., less than one tenth of one percent of the Saudi Fund is invested in CCL, an inconsequential amount of loss for the Saudi Fund if CCL goes bankrupt.  The CCL stock offering was much larger, $1.25 Billion, but CCL could only sell $500 million as there were not sufficient takers. 

 

The stock offering was part of a $6 Billion debt package (much of which is at junk bond rates of 12%), and this on top of the $3 Billion they had tapped earlier.  CCL is burning cash at $1 Billion a month so this will allow them to operate through this year.  If cruising resumes late this year they will have to generate enough cash to cover not only operating expenses but also to service the debt, a tall proposition.

Edited April 7, 2020 by bluesea321

[npcl]

One bit of news that I consider to be more positive is that a Board Member Randall Weisenburger purchased $10 million worth of shares.

[bluesea321]

2 minutes ago, npcl said:

One bit of news that I consider to be more positive is that a Board Member Randall Weisenburger purchased $10 million worth of shares.

 

Was this an outright purchase on the open market where he used his own $10M or was it an exercise of options or non-qualified stock grants given to him as a result of serving on the board?  Do we know?

[bluesea321]

Interesting...  rates offered in the high teens but hedge funds and equity investors still passed.

 

"Before the equity offering, Goldman Sachs, JPMorgan Chase and Bank of America had been working to put together a debt deal for Carnival that would offer some investors a potential return in the high teens, according to two people familiar with the discussions. Bankers pitched the deal to hedge funds and private equity investors, some of whom passed on it because of concerns about the company’s long-term viability."

 

https://www.nytimes.com/2020/04/07/business/coronavirus-cruise-industry-carnival.html

 

 

Edited April 7, 2020 by bluesea321

[npcl]

2 hours ago, bluesea321 said:

 

Was this an outright purchase on the open market where he used his own $10M or was it an exercise of options or non-qualified stock grants given to him as a result of serving on the board?  Do we know?

This was a purchase that was part of the 500 million offering at $8 per share.

[Daniel A]

25 minutes ago, bluesea321 said:

Interesting...  rates offered in the high teens but hedge funds and equity investors still passed.

 

"Before the equity offering, Goldman Sachs, JPMorgan Chase and Bank of America had been working to put together a debt deal for Carnival that would offer some investors a potential return in the high teens, according to two people familiar with the discussions. Bankers pitched the deal to hedge funds and private equity investors, some of whom passed on it because of concerns about the company’s long-term viability."

 

https://www.nytimes.com/2020/04/07/business/coronavirus-cruise-industry-carnival.html

Did the article mention what percentage didn't pass on the offer?  As is usual with the NYT, it isn't what they print, it's often what information they leave out that matters.  The Times has been pushing a recession narrative for a while now, long before even China heard of Covid.  The Times loves to pass along rumors by quoting unnamed sources.