Carnival Shares Soar on Saudi Stake – Higher Liquidity Supports Sentiments
Carnival stock price soared close to 30% in Monday trading as the Public Investment Fund of Saudi Arabia reported the stake of 8.2% in the cruise line company.
Also, the trader’s sentiments started improving due to Carnival’s liquidity situation along with the prospects that Coronavirus has peaked last week and the trends are suggesting stabilization in the coming days.
Carnival has now access to close to $9bn of liquidity. The company announced a new $1.25bn share offering along with the commencement of $3bn of first-priority senior secured notes due in 2023 and $1.75bn of senior convertible notes due in 2023. The company has ended the latest quarter with $500m of cash.
“We are taking further actions to improve our liquidity, including capital expenditure and operating expense reductions, suspending dividend payments on, and the repurchase of, Carnival stock and pursuing additional financing. Based on these actions, we will be able to generate sufficient liquidity to satisfy our obligations.”
The market analysts are also showing confidence in the Carnival’s liquidity situation. Wedbush analyst James Hardiman believes $9.5bn of total liquidity available to CCL puts it in a position to cover its financial needs.
Carnival stock is among the hardest-hit stocks amid the coronavirus selloff. Its stock price is down 80% since the beginning of this year.
The huge share price selloff is blamed on the suspension of sailings both in domestic and international markets following coronavirus outbreaks.
Carnival is also excluded from the $2trn stimulus package from the White House. The package only permits companies to gain access to cash that are established in the United States and also must have a majority of workers based in the United States.
Trump continues to show openness to bailing out cruise lines, even though they are registered as offshore companies: “The cruise line business is very important.” pic.twitter.com/CAxSFZTPKJ
— The American Independent (@AmerIndependent) March 26, 2020
While Trump said he likes to give aid to Cruise Line companies, but it is “very tough to make a loan to the company when they’re based in a different country.”