As its ships have remained idle for more than a year, Carnival has raised billions of dollars in money, largely through debt. Earlier this year, a Carnival cruise.
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Carnival
is seeing its British-listed stock as a high-seas arbitrage opportunity. Carnival (ticker: CCL) announced in a securities filing Monday that it may offer and sell up to $500 million in common stock “only when the ordinary shares of the company are available.”
Carnival Corporation is a public company based in the United Kingdom
are selling at a discount to shares of common stock of a company in the United Kingdom.
Carnival.
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The world’s largest cruise line said it will use any revenues from stock sales to buy its U.K.-listed shares (CCL.London). In other words, Carnival regards stock buybacks in the United Kingdom as an excellent method to build value.
Carnival’s shares on the New York Stock Exchange have outperformed over the last year as investors bet on a post-pandemic economic recovery. Carnival’s shares in the United States was trading at $26 and change at midday Monday, down more than 6% on the day. According to FactSet, the U.K.-listed shares ended Monday’s session down around 1.6 percent. According to FactSet, the U.K.-listed company trades at nearly 11 times the enterprise value of its next fiscal year’s expected earnings before interest, taxes, depreciation, and amortization. This compared to around 12 times for US stocks. This isn’t the first time the arbitrage concept has been mentioned. Analysts at Citi Research, for example, suggested in a research note earlier this year that the U.K.-listed shares were the superior way to play Carnival. The U.K.-listed shares could be a means for U.S. investors to participate in the stock, but they would have to find a way to trade on a foreign stock market and pay the associated fees. A financial counselor or broker could help you with this.
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The announcement comes as the corporation reports massive losses after its fleet has been idle in the United States for 15 months due to the pandemic. Carnival has gone through many rounds of capital raising, largely debt, after recently reporting an adjusted second-quarter loss of $2 billion. Carnival, based in Miami, announced earlier this month that its Carnival Cruise Line brand will begin operations with eight ships by the end of August. Sailings from Galveston, Texas, as well as Miami and Port Canaveral, Florida, are included. Other Carnival brands, like as Princess Cruises, will begin sailing from the United States in September. Lawrence C. Strauss can be reached at lawrence.strauss@barrons.com.
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