Three major cruise ship operators have raised additional liquidity in the past week in an effort to shore up their finances in the wake of the ongoing Covid-19 pandemic.
The German TUI AG group and KfW, the state owned developmsnt bank that has it head office in Frankfurt, have agreed to increase the existing KfW tranche by €1.05 billion. “The drawing of this amount is subject to (i) the issuance of a Convertible Bond to the Economic Stabilization Fund (WSF) in the amount of €150m and (ii) a waiver by the bondholders of the Senior Notes due in October 2021. Both conditions and other formal requirements need to be fulfilled by 30 September 2020,” TUI said in a statement.
The stabilisation package which totals at €1.2 billion strengthens TUI’s position and would provide sufficient liquidity in this volatile market environment to cover TUI’s seasonal swing through winter 2020-21 and thereafter and in the case of any further long-term travel restrictions and disruptions related to Covid-19.
Including the additional stabilisation package, TUI AG would, as of today, have cash and available facilities of €2.4 billion.
Similar to the first KfW tranche in the amount of €1.8 billion issued in April, the additional KfW tranche will be structured as an increase to TUI’s existing Revolving Credit Facility (“RCF”). The execution of the amendments with the RCF banking consortium is almost finalised.
“All conditions on the issuance of the Convertible Bond have been agreed. The potential Convertible Bond would be subscribed by the WSF subject to the conclusion of a subscription agreement and shall have an initial term of six years. The bond would bear interest at a rate of 9.5% p.a. TUI has a redemption right once the €1.05 billion KfW tranche is redeemed. If fully converted, it would represent a stake in TUI AG of up to 9%,” TUI said.
TUI owns 50% of the shares in TUI Cruises, which again owns in full Hapag-Lloyd Cruises. Marella Cruises in the UK is fully owned by TUI.
Meanwhile Royal Caribbean Group (RCG) said on 12 August that it has secured a binding commitment from Morgan Stanley for a $700 million term loan facility. The company may draw on the facility at any time prior to August 12, 2021. Once drawn, the loan will bear interest at L + 3.75% and will mature 364 days from funding.
“The facility will be guaranteed by RCI Holdings, LLC, a wholly owned subsidiary of the Company that owns the equity interests in subsidiaries that own seven of the Company's vessels. The Company has the ability to increase the capacity of the facility by an additional $300 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries of the Company. If drawn, the Company expects to use the net proceeds for general corporate purposes,” RCG said..
Carnival Corporation & plc on 7 August said it had closed its previously announced registered direct offering of 93,663,808 shares of its common stock at a price of $14.02 per share to a limited number of holders of its 5.75% Convertible Senior Notes due 2023 (the "Convertible Notes"). The Corporation used the proceeds from this closing to repurchase $836,284,000 principal amount of its Convertible Notes in privately negotiated transactions.
“The Corporation expects to close an additional 5.5 million shares as part of the registered direct offering on August 10, 2020. The Corporation intends to use the proceeds from the August 10th closing to repurchase an additional $49.3 million principal amount of its Convertible Notes in a privately negotiated transaction,” Carnival said.
