Shares of cruise companies outperformed on Tuesday, with the Royal Caribbean Group hitting the hardest after announcing a total of $ 1 billion in public stock and private convertible debt offerings and providing booking updates.
Royal Caribbean shares RCL,
11.1% in afternoon trading, to accelerate SPX of S&P 500 index,
decliners. The stock is on track for the biggest one-day decline since its 11.3% decline on June 24.
Stock sales were also weighed on Royal Caribbean’s peers as shares of Norwegian Cruise Line Holdings Ltd NCLH.
The second largest S&P 500 loss and Carnival Corp fell 7.4% for CCL.
6.9% decline for the third largest decline.
Royal Caribbean said before the open that it had launched a public offering of $ 500 million worth of its common stock. Based on Monday’s stock closing price of $ 69.83, that would represent 7.16 million shares or 3.3% of shares outstanding. The company plans to use the proceeds for general corporate purposes.
Royal Caribbean could raise an additional $ 75 million if the offering underwriters used the options granted to purchase additional shares to cover all options.
The company said it also initiated a private offer of $ 500 million in senior convertible notes by 2023, and gave underwriters the option to purchase an additional $ 75 million denomination. Royal plans to use the proceeds to pay 2.650% of its senior notes by 2020.
The notes will be convertible at the option of the holder under certain special circumstances. The company said it could fulfill its conversion obligation by paying or distributing its election, either in cash, common stock or a combination of both.
Separately, Royal Caribbean stated that bookings for 2021 have continued to improve over the past two months, but remain below pre-COVID-19 levels, while pricing for 2021 bookings is relatively flat.
See related: Royal Caribbean Trials ‘Cruises Nowhere’ with ships sailing in circles from Singapore.
The company said it is waiting to hear from the Center for Disease Control and Prevention (CDC) to confirm whether there will be future extensions to the CDC’s previous “no sale” order, currently up to 31 October is.
For now, Royal said it remains “optimistic” that it will be able to resume commercial sailors sometime this year.
Royal’s stock has lost 53.5% year to date, while Norwegian’s stock has lost 71.3% and Carnival’s shares have fallen 72.1%. The S&P 500 has gained 9.1% this year.