Royal Caribbean in Talks for More Financing to Ride Out Shutdown

(Bloomberg) -- Royal Caribbean Cruises Ltd. is in talks to raise new financing to weather the shutdown of the travel industry during the pandemic, according to people with knowledge of the matter.

The cruise operator has been discussing a package that may include as much as $600 million of bonds and is working with Morgan Stanley on a possible offering, said the people, who asked not to be identified because the talks are private.

The Miami-based company has also considered the potential for selling convertible bonds and equity, although the situation is fluid and no structure has been set, the people said.

Representatives for Royal Caribbean and Morgan Stanley declined to comment.

Cutting Jobs

Royal Caribbean, which extended its global suspension until June 11, said last week it’s cutting more than 1,300 U.S. jobs, about a quarter of its workforce in the country.

Rival Carnival Corp. issued $4 billion of bonds earlier this month to bolster its liquidity. And Viking Cruises Ltd. has also discussed new financing with banks, Bloomberg News reported April 7.

Royal Caribbean boosted its liquidity last month with a $2.2 billion secured term credit line led by Morgan Stanley. With that debt, it had more than $3.6 billion at its disposal, including cash deposits and other existing revolving credit facilities that haven’t been used, it said at the time.

The cruise operator’s shares have tumbled 74% this year through Wednesday, giving it a market value of about $7 billion. S&P Global Ratings cut the company’s rating to junk earlier this month, while Moody’s Investors Service lowered its rating to one step above speculative-grade.

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