From Exxon to Royal Caribbean Cruises, U.S. companies rush to hoard cash
By Joshua Franklin NEW YORK (Reuters) - Corporate America is gearing up for leaner times. From Exxon Mobil Corp to Royal Caribbean Cruises Ltd , companies rushed to borrow more money and boost their cash coffers on Tuesday, as the market turmoil fueled by a plunge in oil prices and the global coronavirus outbreak raised the prospect of an economic downturn
By Joshua Franklin
NEW YORK (Reuters) - Corporate America is gearing up for leaner times.
From Exxon Mobil Corp
"It's companies loading up on cash when you can get it. They are effectively building up that war chest," said Jeremy Swan, managing principal at accounting and tax advisory firm CohnReznick LLP.
Royal Caribbean said on Tuesday it increased its credit capacity by $550 million to boost liquidity. The company's stock plunged this month, amid concerns that the coronavirus outbreak would curtail travel.
"These are extraordinary times and we are taking these steps to manage the company prudently and conservatively," Royal Caribbean Cruises Chairman and Chief Executive Richard Fain said in a statement.
Exxon, which has one of the corporate world's strongest balance sheets, filed paperwork on Tuesday for an unspecified board offering for what it called general corporate purposes, as the oil major grapples with the collapse in Brent crude
Oreo maker Mondelez International Inc
United Airlines Holdings Inc
"We also believe we have good options to raise additional liquidity in the weeks to come, if needed," United President Scott Kirby said.
Other companies which chose not to raise new funds yet touted their financial strength to calm investors. In an investor presentation on Tuesday, American Airlines Group Inc
"American Airlines has more liquidity than any other airline in the world, which is exactly where we want to be in an environment like this and exactly why indeed we've held so much for so long," American Airlines Chairman and CEO Doug Parker said at a conference on Tuesday.
Debt-laden companies in service sectors hit by reduced tourism and discretionary spending, such as airlines, cruise lines, movie theaters, gaming companies and hotel chains, are particularly vulnerable, according to Fitch Ratings.
"What we've seen in this market is that stability today isn't necessarily stability tomorrow," Swan said.
(Reporting by Joshua Franklin in New York; Editing by Lisa Shumaker)
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