Carnival Halts Dividend and Buybacks as Coronavirus Lawsuits Emerge

Carnival shares plunge after the company discloses it is suspending its dividend and stock buyback program, and also fielding lawsuits related to the coronavirus outbreak aboard its ships.
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Shares of beleaguered cruise-line operator Carnival  (CCL) - Get Report plunged again on Tuesday after the company announced that it was suspending its dividend and stock buyback program, and also fielding lawsuits related to the coronavirus outbreak aboard several of its ships.

Shares of Carnival were down more than 13% after the company disclosed in a regulatory filing that, in addition to the dividend share-repurchase cancellations, it also was cutting costs and pursuing additional financing - and that even with all of its efforts still expects to post a net loss for its fiscal year ending Nov. 30.   

Carnival also said it has received and expects to continue to receive lawsuits from passengers aboard its Grand Princess and Diamond Princess cruise ships in February. The Diamond Princess ship ultimately docked in Japan and was quarantined for more than two weeks, with hundreds of passengers becoming ill from the coronavirus.

In separate filings, Carnival also said it plans to issue $1.25 billion in stock to help it sustain its operations over the next 12 months as the coronavirus crisis hopefully wanes, and cruise vacation travel resumes. 

Based on Monday's stock closing price of $12.80, the offering could represent about 97.66 million shares, or about 18.5% of the shares outstanding. The company also said it commenced private offerings of $3 billion shares of senior secured notes due 2023 and $1.75 billion in senior convertible notes due 2023. 

Meantime, the company on Monday announced that it was extending its pause in operations through May 11.

"As Covid-19 continues to impact global health and commerce, we are sorry to extend our pause in operations until May 11," the company stated. "If you have an impacted sailing, you will have received an email direct from Carnival or your travel advisor.”

Shares of Carnival were down 9.29% at $14 in trading on Tuesday. The stock has plunged more than 75% in the past three months.