Carnival Corporation, which is the largest cruise line in the world, is said to be in negotiations to sell one of its luxury brands to Saudi investors. CNBC broke the news this afternoon for the first time saying that preliminary negotiations were underway to explore the potential sale of Seabourn Cruise Line to Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, which has been an investor in Carnival Corporation since 2020. .
CNBC reports that “people familiar with the situation” spoke to them about the negotiations. Carnival declined to comment on the rumors or speculation to CNBC, while the Saudi fund did not respond to their inquiries.
The Public Investment Fund launched the Cruise Saudi initiative in early 2021 as part of efforts to develop Saudi Arabia’s tourism industry, leveraging its UNESCO sites and natural resources, establishing and developing the cruise industry in Saudi Arabia. Part of the goal is to attract more tourists and international cruise ships to Saudi Arabia. The government has drawn up a plan from 2021 to 2025 to increase investment in non-oil industry projects as part of an overall effort to diversify sources of revenue away from oil.
Saudi Arabia’s sovereign wealth fund acquired its first investment in Carnival Corporation in the spring of 2020 by buying more than 43.5 million shares of Carnival, or about 8.2% of outstanding shares, according to a filing with the Securities and Exchange Commission. the United States. In its latest filing, the fund reports that it has increased the investment in Carnival to 50.8 million shares as well as $40 million in Carnival notes.
Speculation is that Carnival Corp. is considering selling one of its brands as a way to raise additional capital. In March, during the company’s latest update to investors, Arnold Donald, President and CEO, highlighted their success since the start of the pandemic in driving a steady stream of capital raising. He noted that he surpassed $29 billion while refinancing more than $9 billion in debt, improving interest rates, amending more than 100 different lender agreements and successfully dealing with the maturity tower. of the company until 2024. He noted that they maintain a constant liquidity position exceeding $7 billion. Just last week, Carnival Corp. also announced that it had priced an additional $1 billion private offering of senior unsecured notes due 2030 to refinance notes due 2023.
It’s unclear if Carnival is looking to establish a joint venture with Cruise Saudi as an investor in Seabourn or if they were considering selling the brand. Seabourn was launched in 1988 by Norwegian industrialist Atle Brynstad and veteran cruise line executive Warren Titus, who had previously launched Royal Viking Line, another well-respected luxury brand. They have ordered three 10,000 gross ton all-suite cruise ships that can each accommodate 200 passengers to be built in Germany. The cruise line completed two of the three ships before running out of capital.
Carnival Corporation made an initial investment in Seabourn in 1991 and again in 1996 when they acquired 50% of the company. They acquired the rest of Seabourn in 2001 and after rumors that they were considering selling the niche brand, announced plans to expand the cruise line from 2006. The original ships were replaced by five larger 600-passenger cruise ships and starting this year. Seabourn is set to launch the first of two luxury cruise ships designed for expedition cruising. Seabourn remains a fine brand within the Carnival operation focused on the ultra-luxury segment of the market.