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Carnival Corporation has seen a sharp rise in its share price following a decision by the Public Investment Fund of Saudi Arabia to take a significant stake in the company.
The sovereign wealth fund snapped up 8.2 per cent of the cruise giant, or 43,508,895 shares of common stock.
Shares jumped 17 per cent, to $10 a piece, after weeks of decline as the coronavirus pandemic continues to decimate the tourism industry.
Carnival Corporation is, however, still down by more than 70 per cent since the beginning of the year.
The sudden drop in business has forced Carnival to take extreme measures to shore up its liquidity.
These have included fully drawing down an existing $3 billion revolving credit facility, as well as reducing capital expenditures and operating expenses, suspending dividend payments and pursuing additional financing.
In the midst of the crisis, Carnival also warned it may be required to seek waivers from the lenders which could lead to increases costs and interest.
“There can be no assurance that we would be able to obtain waivers in a timely manner, or on acceptable terms at all.
“If we were not able to obtain waivers or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contract payables.
“As a result, the failure to obtain waivers would have a material adverse effect on us,” explained a filing.
Unlike the airline sector, relief for cruise lines was not included in the United States’ $2.2 trillion coronavirus bill.
This is likely because many lines are registered outside the United States in countries like Panama, Liberia, the Bahamas and Switzerland, and do not pay United States federal income taxes.
Source: breakingtravelnews.com
