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

Reuters March 11, 2020 05:06:01 IST
From Exxon to Royal Caribbean Cruises, U.S. companies rush to hoard cash

From Exxon to Royal Caribbean Cruises US 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.

"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 prices.

Oreo maker Mondelez International Inc on Monday announced a $2.5 billion credit facility, in addition to a similar agreement worth $1.5 billion (1.16 billion pounds) agreed less than two weeks ago.

United Airlines Holdings Inc also said on Tuesday it had raised an extra $2 billion in financing while slashing its 2020 capital expenditures by more than a third.

"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 flagged more than $7.3 billion in cash and unused bank lending in reserve.

"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)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.