Summary
Carnival Corporation (CCL) filed a Current Report on Form 8-K on November 12, 2020, detailing an amendment to its at-the-market (ATM) equity offering program. The company, along with Carnival plc, entered into an amendment to an existing equity distribution agreement, bringing in additional sales agents to facilitate the "New ATM Offering." This move expands the company's ability to raise capital through equity sales in the open market, up to a total of $1.5 billion. The filing also reiterates the significant risks and uncertainties faced by the company, particularly those related to the ongoing COVID-19 pandemic, which continues to impact operations, liquidity, and future prospects.
Key Highlights
- 1Carnival Corporation and Carnival plc have expanded their $1.5 billion "at-the-market" equity offering program by entering into an amendment to their Equity Distribution Agreement.
- 2The amendment adds several new financial institutions as "Additional Sales Agents" to the existing agreement with J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC.
- 3This expansion aims to enhance Carnival's ability to raise capital by diversifying the sales agents involved in selling shares on the open market.
- 4The filing emphasizes the significant and ongoing impact of the COVID-19 pandemic on the company's financial condition, operations, and ability to secure financing.
- 5Carnival disclosed potential non-compliance with debt maintenance covenants due to the COVID-19 outbreak, though waivers are in place through August 31, 2021, with the next testing date on November 30, 2021.
- 6The company provided an extensive list of forward-looking statements and risk factors, underscoring the volatile nature of its business and the cruise industry, with COVID-19 amplifying many existing risks.
Frequently Asked Questions
The primary purpose of this filing is to announce an amendment to Carnival Corporation and Carnival plc's equity distribution agreement. This amendment expands the number of sales agents participating in their $1.5 billion "at-the-market" (ATM) equity offering program, enhancing their ability to raise capital by selling shares on the open market.
The "New ATM Offering" program has a total capacity of $1.5 billion. The expansion through the Joinder Agreement increases the network of agents available to sell these shares, thereby facilitating the execution of this offering.
The filing heavily emphasizes the significant and ongoing impact of the COVID-19 pandemic on Carnival's financial condition, operations, and ability to secure financing. Other risks include potential covenant breaches on debt, global events impacting travel demand, operational incidents, regulatory changes, data security breaches, challenges in staffing, fuel price fluctuations, currency exchange rates, industry overcapacity, and shipbuilding program execution.
This filing announces the expansion of an 'at-the-market' equity offering program. This means Carnival has the authorization and the framework in place to sell shares opportunistically in the public market at prevailing market prices. It does not necessarily mean that shares are being issued immediately or that a specific amount has been sold on the date of the filing, but rather that the mechanism for doing so has been broadened.