Interesting part article from Twitter2 Apr 2020 22:18
As I have highlighted in the table above, nearly $4 billion was coming due this year and next year.
Therefore, the $6.25 billion raised effectively lets the company pay off the debt that is coming due over the next 18 months, and the losses it is about to incur (assuming they only run into the low billions).
It may have saved Carnival in the short-run, but it doesn’t make for a much safer company.
Valuation: the adjusted share count, by my calculations is as follow:
684 million existing62.5 million from new equity raiseup to an extra 175 million, in exchange for the reduction of $500 million in debt if the convertibles are exercised.
Let’s call it a share count of 750 million for now.
At the latest share price of 650p, we get a market cap of c. US $6 billion.
On the basis that the funds raised will only be used to pay off existing debts and absorb losses, I would see the outstanding debts as being still in the region of $12 billion.
We therefore get an enterprise value of $18 billion for ships and equipment with tangible book value of $38 billion (as of November 2019, before writedowns and impairments).
The ships are therefore currently available at half price, versus their depreciated cost.
So, is there value to be had? I do think there could be, yes.
Though I’m not sure if I’d be brave enough to stick my neck out by owning the equity, except in very small amounts. Earning 11.75% on the debt would suit my temperament a whole lot more.
Sign In
Follow the stocks
