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Cruise shares lead S&P 500 losers after $ 1 billion shares of Royal Caribbean debt offerings



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The shares of cruise companies were beaten on Tuesday, and Royal Caribbean Group hit hardest after announcing a public offering of public shares and private convertible debts worth $ 1 billion and providing an update of reservations.

The shares of Royal Caribbean RCL,
-12.30%
absorbed 11.1% in lunch trading to accelerate all SPX of the S&P 500 index,
-0.51%
deviations. Shares are on track with the biggest one-day decline since falling 11.3% on June 24th.

Trading volume jumped to 9.8 million shares, which is already more than the average for the whole day of about 6.2 million shares, according to FactSet.

The sale of shares also weighed on Royal Caribbean’s peers as shares of Norwegian Cruise Line Holdings Ltd. NCLH,
-7.08%
fell 7.4 percent to be the second-largest loser in the S&P 500, and Carnival Corp. CCL,
-6.70%
slipped 6.9% to be the third-largest drop.

Royal Caribbean said earlier that it had launched a public offering of its $ 500 million common stock. Based on Monday’s closing price of $ 69.83, that would represent about 7.16 million shares, or about 3.3% of outstanding shares. The company plans to use the proceeds for general corporate purposes.

If the insurers of the offer exercise all the options provided to purchase additional shares to cover redistributions, Royal Caribbean may raise an additional $ 75 million.

The company said it has also begun a private offering of $ 500 million in senior convertible banknotes due by 2023 and has provided insurers with options to purchase additional banknotes worth up to $ 75 million. Royal plans to use the proceeds to pay off its 2,650% of senior banknotes due in 2020.

The notes will be convertible at the option of the holder in certain circumstances. The company said it could meet its conversion obligation by paying or delivering “at its option” cash, ordinary shares or a combination of both.

Separately, Royal Caribbean said that bookings for 2021 have continued to improve over the past two months, but remain below pre-COVID-19 levels, while booking prices in 2021 are relatively low.

See related: Royal Caribbean trials “cruises to nowhere” with ships sailing in circles from Singapore.

The company said it is awaiting a hearing from the Centers for Disease Control and Prevention (CDC) to confirm whether there will be future extensions to the CDC’s previous “no canvas” order, which currently extends to October 31st.

For now, Royal has said it remains “optimistic” that it will be able to resume trade for some time this year.

Shares of Royal fell 53.5% year-on-year, while shares of Norwegian fell 71.3% and shares of Carnival fell 72.1%. The S&P 500 has gained 9.1% this year.


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