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Royal Caribbean Slides as It Looks to Raise $1 Billion From Stocks, Notes Offerings

Royal Caribbean says bookings for 2021 have continued to improve over the past two months, but are still below pre-Covid-19 levels.

Royal Caribbean  (RCL) - Get Royal Caribbean Cruises Ltd. Report shares were falling after the cruise ship operator said it was raising $1 billion between stock and convertible bonds as the company struggles to weather the coronavirus pandemic. 

Shares of the Miami-based company were down 10.9% to $62.22.

Royal Caribbean said in separate news releases that it had begun an offering of $500 million of common stock and $500 million in convertible notes.

Each offering can be increased by up to $75 million should the respective underwriters choose to purchase as well, the company said.

The company said it expects to use a portion of the net proceeds from the offering to repay its 2.65% Senior Notes due 2020, with the remainder to be used for general corporate purposes.

Morgan Stanley and Bank of America Corp. are leading the stock offering.

"The disruptions to our operations resulting from the Covid-19 pandemic have had, and continue to have, a material negative impact on our financial condition and results of operations," the company said in a regulatory filing. "The outbreak of Covid-19 has resulted in an unprecedented global response to contain the spread of the disease." 

Separately, Royal Caribbean said in a filing with the Securities and Exchange Commission that bookings for 2021 have continued to improve over the past two months but are still below pre-Covid-19 levels.

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Pricing for 2021 bookings was relatively flat year over year when including the negative yield impact of bookings made with future cruise credits, the company said, and was slightly up when excluding them.

In addition, the company said in the filing that its Royal Caribbean International cruise line has decided to suspend all sailings departing from Australia and New Zealand through Dec. 31.

The company's Celebrity Cruises line will be suspending its full 2020/2021 Winter program in Australia and Asia, while the Azamara line will be suspending its 2020/2021 Winter sailings throughout Australia, New Zealand, South Africa and South America.

Royal Caribbean said it has repatriated over 44,000 crew members to their home countries around the globe.

As of Sept. 30, Royal Caribbean said it had liquidity of about $3.7 billion, including $3 billion in cash and cash equivalents and a $700,000 million commitment for a 364-day term loan. 

The cash burn rate for the third quarter was consistent with the previously announced range of roughly $250 million to $290 million per month during a prolonged suspension of operations.

On Monday, Carnival  (CCL) - Get Carnival Corporation Report said that it canceled remaining November sailings from Miami and Florida's Port Canaveral on six ships, saying "operations will not be feasible."

Carnival was down 6.2%, while Norwegian Cruise Line Holdings  (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report was off nearly 7%.