Carnival Corp is borrowing nearly $3bn as the coronavirus continues to ravage the cruise industry — but it still might not be enough.
According to regulatory filings on Monday, the New York-listed cruise line is taking out the entirety of a 2019 multi-currency credit agreement for the next six months, pumping $1.7bn, €1.0bn ($1.1bn) and £150m ($184m) into its coffers.
"[Carnival] borrowed under the Facility Agreement in order to increase its cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 outbreak," the filing read.
"The proceeds from the Facility Agreement borrowings will be available to be used for working capital, general corporate or other purposes."
Cruise has been hit especially hard by the Covid-19 coronavirus outbreak, which has infected more than 150,000 globally, killing more than 5,700, according to the World Health Organization.
Carnival shut down operations 13 March, alongside Norwegian Cruise Line. The two make up the industry's "Big Three" alongside Royal Caribbean and cover roughly 80% of the world's cruise market.
The trio have lost $54bn on share prices from their 52-week highs.
The borrowing comes a week after Norwegian took out a $675m loan against one of its ships in order to boost its financial position as the coronavirus continues to spread.
On Monday, the freefall continued, with Carnival shares trading down $1.07, or 6%, to $16.51.
Carnival extended the agreement, originally set to expire in 2021, in August 2019, pushing the expiry back three years to 2024.
According to Securities and Exchange Commission filings, the lenders include the Milan branches of Citibank and HSBC, Deutsche Bank in London, Societe Generale and Wells Fargo. The amended agreement added Bank of America and Bank of China, among others.
Still a difficult situation
According to UBS analyst Robin Farley, this capacity alongside export credit financing could still be about $1.3bn short of funding the rest of Carnivals' capital calls this year, including roughly $1.9bn in progress payments, $1.6bn in debt maturities, $345m in first quarter dividends and $250m in interest.
"But we note CCL's leverage as of Q4'19 of 2.0x was materially lower than [Royal Caribbean] and [Norwegian], so they likely have the most capacity to raise additional debt and have communicated that they are currently pursuing additional financing options.," Farley said.
