The Public Investment Fund, Saudi Arabia’s sovereign wealth fund, has acquired an 8.2% stake in Carnival Corp.
According to Carnival Corp.’s securities filing on Monday, Saudi Arabia acquired 43.51 million Carnival shares. Carnival’s closing stock price of $8.49 last Friday makes the transaction worth about $370 million.
With the news, Carnival Corp.’s share price increased 22% on Monday afternoon. The company’s stock has fallen about 80% since mid-January.
Like other cruise companies, Carnival Corp. has paused its operations since mid-March due to the Covid-19 pandemic. Cruising has been suspended through the middle of May.
Carnival Corp. last week shored up its liquidity, securing about $500 million from a stock sale and about $5.75 billion on the bond market.
Carnival Corp. borrowed at a high cost. The company is paying 11.5% interest on $4 billion in three-year senior secured notes and 5.75% interest on $1.75 billion in three-year senior convertible notes.
Carnival Corp. reported higher third quarter-net income, but reduced its outlook for the 2019 fiscal year and said that business in Europe and the U.S. had eroded since it last reported results three months ago.
Reacting to the mix of news, investors pushed Carnival shares down 7% in mid-morning trading on Thursday.
Carnival said net income for the quarter ended Aug. 31 was $1.78 billion, up from $1.71 billion a year earlier, while revenue rose to $6.53 billion from $5.84 billion.
Carnival also reported higher earnings adjusted for nonrecurring factors, but forecast that earnings for the full year would fall in the range of $4.23 to $4.27 a share, compared to a previous range of $4.25 to $4.35 put forth in June and actual results of $4.26 a share in 2018.
Carnival blamed higher anticipated fuel prices for the reduction.
“We achieved additional cost improvements largely driven by leveraging our scale, offsetting the earnings impact due to voyage disruptions from the combined impact of Hurricane Dorian, the tensions in the Arabian Gulf and the delayed delivery of Costa Smeralda,” Carnival CEO Arnold Donald said in a statement.
“A further reduction in guidance for ticket and onboard revenue worth 6 cents per share in part contributed to by the high level of close-in voyage disruptions was also offset. However, due to an 8 cent a share impact from the recent spike in fuel prices caused by geopolitical events, we are reducing our full-year guidance for 2019 by 5 cents a share,” Donald said.
Carnival said it expects it’s North America and Australia segment yields to be up for the year, but slightly less than previous guidance while its Europe and Asia segment is still expected to be down for the year but slightly more than previous guidance.
It also said: “Cumulative advanced bookings for the first half of 2020 are ahead of the prior year at prices that are in line compared to 2019 on a comparable basis. Since June, both booking volumes and prices for the first half of next year have been running lower than the prior year.”
By mid-afternoon Thursday, Carnival shares were trading at $44.14, off 8.2% from Wednesday’s close.