Royal Caribbean Group‘s
finance leaders expect to use the profits from the sale of a $ 1.5 billion installment to boost the tour operator’s liquidity and, possibly, to reduce its debt, which came to a head during the pandemic.
The Miami-based company, which is nearing the first anniversary of its discontinuation of North American shipping, said Monday it has launched an equity offer of 16.94 million shares at $ 91 each. The sale is expected to close on Wednesday and bring extra money to Royal Caribbean, Chief Financial Officer Jason Liberty said.
“We are constantly evaluating and accessing the capital markets. We saw an opportunity here, ”said Mr Liberty.
The new capital could help the company pay off its debts, Mr Liberty said, adding “last year we took on a lot of debt.”
Royal Caribbean net debt rose more than 42% to $ 16.45 billion in 2020 from the previous year, according to S&P Global Ratings, a data provider and rating company. The tour operator, which ended 2020 with about $ 4.4 billion in cash, is expected to burn through between $ 250 million and $ 290 million per month during the hiatus, Mr. Liberty said. Royal Caribbean reported last week a net loss of $ 5.8 billion for 2020, compared to net revenue of $ 1.9 billion in 2019.
Royal Caribbean has suspended sailings on most of its vessels through at least April 30. Carnival of its peers Corp.
Carnival Cruise Line and Take the Norwegian Cruise Line Limited.
has canceled U.S. shipments through the end of May. Mr Liberty declined to consider whether Royal Caribbean would extend its navigation ban.
The time for the resumption of U.S. flights is ultimately subject to approval from the U.S. Centers for Disease Control and Prevention, which requires operators to make false addresses and apply for concessionary permits. at least 60 days before giving passengers travel. Mr Liberty said Royal Caribbean is in contact with the CDC, but declined to say further.
A CDC spokesman said last week that a tourist has not made fraudulent trips or applied for a permit, as the CDC has not yet published technical guidance for agreements between tourists and port health authorities and local.
Canada recently extended the one-year cruise ban until February 2022. Royal Caribbean is currently considering how and how it could travel to Alaska and New England despite the Canadian ban, Mr. Liberty said. .
Mr. Liberty will see a little more cash come in when the company closes the sale of their Azamara business. Royal Caribbean said in January that it had agreed to sell the tour line to private equity firm Sycamore Partners for $ 201 million in cash. “Every dollar counts,” Mr Liberty said of the affair.
He declined to comment on how much the Royal Caribbean would have to spend on health and safety measures once it resumed most of its operations. “The field is too deep to estimate,” Mr Liberty said. A Norwegian competitor has said it has set aside around $ 300 million for health and safety efforts.
S&P positively received the Royal Caribbean equality offer. The rating company said the sale of the stock would provide “a liquidity issue for the maritime operator to support the ongoing cash flow as jobs continue to be halted and gradually commenced.”
The money could also help Royal Caribbean reduce its leverage levels, S&P said.
Last week, S&P reduced their distributor credit rating on Royal Caribbean to below its investment level. Mr Liberty said Royal Caribbean wants to return to the investment stage, but did not give a specific timeline for that.
Write to Nina Trentmann at [email protected] and Dave Sebastian at [email protected]
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8