Royal Caribbean Group announces completion of $1.5 billion offering of senior unsecured notes to refinance existing indebtedness

Rhea-AI Summary

Royal Caribbean Cruises (NYSE: RCL) has successfully completed a private offering of $1.5 billion in 5.625% Senior Notes due 2031. The company plans to use the proceeds to refinance existing debt, including:

• Redeeming all outstanding $700 million of 7.250% Senior Notes due 2030
• Repaying the entire $232 million Silver Dawn finance lease

These actions will result in RCL having no remaining guaranteed or secured notes outstanding. The new notes were offered only to qualified institutional buyers and certain non-U.S. persons, and are not registered under the Securities Act. Any remaining proceeds may be used to temporarily repay borrowings under revolving credit facilities.

Positive

• Successful completion of $1.5 billion senior unsecured notes offering
• Lower interest rate of 5.625% on new notes compared to 7.250% on redeemed notes
• Elimination of all guaranteed and secured notes after redemption
• Potential reduction in borrowings under revolving credit facilities

Negative

• Increase in total debt by $568 million (difference between new offering and redeemed debt)
• Extended debt maturity to 2031, potentially limiting financial flexibility

Insights

Financial Analyst

Royal Caribbean's $1.5 billion senior unsecured notes offering is a significant financial move that aims to optimize the company's debt structure. By refinancing existing debt at a lower interest rate of 5.625%, down from 7.250% on the notes being redeemed, RCL is set to reduce its interest expenses considerably.

The redemption of all outstanding $700 million of 7.250% Senior Notes due 2030 is particularly noteworthy as it will leave the company with no remaining guaranteed or secured notes outstanding. This could potentially improve RCL's financial flexibility and borrowing capacity in the future.

Additionally, the repayment of the $232 million Silver Dawn finance lease demonstrates the company's commitment to deleveraging. The temporary repayment of revolving credit facilities with any excess proceeds is a prudent move to minimize interest costs in the short term.

Overall, this refinancing should strengthen RCL's balance sheet and potentially lead to improved profitability, which could be viewed favorably by investors. However, it's important to note that while the interest rate is lower, the company is extending its debt maturity to 2031, which carries its own set of long-term considerations.

MIAMI, Sept. 26, 2024 /PRNewswire/ -- Royal Caribbean Cruises Ltd. (NYSE: RCL) (the "Company") today announced that it has completed its private offering of $1.5 billion aggregate principal amount of 5.625% Senior Notes due 2031 (the "Notes"). The Notes will mature on September 30, 2031, unless earlier redeemed or repurchased.

The Company intends to use the proceeds from the sale of the Notes to redeem and/or repay certain of its indebtedness, including, but not limited to, (i) to redeem all of the outstanding $700 million aggregate principal amount of its 7.250% Senior Notes due 2030, after which the Company will have no remaining guaranteed or secured notes outstanding; and (ii) to repay in full all of the outstanding $232 million aggregate principal amount of its Silver Dawn finance lease (including to pay fees and expenses in connection with each of the foregoing), on September 27, 2024 and November 25, 2024, respectively. Pending application in full of the proceeds, the Company may apply some of the proceeds to temporarily repay borrowings under its revolving credit facilities.

The Notes were offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States only to certain non-U.S. persons in reliance on Regulation S. The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. This press release shall not constitute a notice of redemption with respect to the Company's 7.250% Senior Notes due 2030.

Special Note Regarding Forward-Looking Statements

Certain statements in this press release relating to, among other things, the use of proceeds from the sale of the Notes constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited, to: statements regarding the intended use of proceeds from the sale of the Notes and the expected timing of redemption of the Company's 7.250% Senior Notes due 2030. Words such as "anticipate," "believe," "considering," "could," "driving," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," "would" and similar expressions are intended to help identify forward-looking statements. Forward-looking statements reflect management's current expectations, but they are based on judgments and are inherently uncertain. Furthermore, they are subject to risks, uncertainties and other factors that could cause the Company's actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to, the following: the impact of the economic and geopolitical environment on key aspects of the Company's business, such as the demand for cruises, passenger spending, and operating costs; changes in operating and financing costs; the unavailability or cost of air service; adverse events such as terrorist attacks, war and other similar events; disease outbreaks and an increase in concern about the risk of illness on the Company's ships or when traveling to or from the Company's ships, all of which could reduce demand; incidents or adverse publicity concerning the Company's ships, port facilities, land destinations and/or passengers or the cruise vacation industry in general; the effects of weather, natural disasters and seasonality on the Company's business; the impact of issues at shipyards, including ship delivery delays, ship cancellations or ship construction cost increases; shipyard unavailability; vacation industry competition and changes in industry capacity and overcapacity; unavailability of ports of call; an inability to source the Company's crew or the Company's provisions and supplies from certain places; the uncertainties of conducting business internationally and expanding into new markets and new ventures; the Company's ability to obtain sufficient financing, capital or revenues to satisfy liquidity needs, capital expenditures, debt repayments and other financing needs; the Company's indebtedness, any additional indebtedness the Company may incur and restrictions in the agreements governing the Company's indebtedness that limit the Company's flexibility in operating its business; changes in foreign travel policy of the United States or other countries; growing anti-tourism sentiments and environmental concerns; concerns over safety, health and security of guests and crew; the impact of new or changing legislation and regulations (including environmental regulations) or governmental orders on the Company's business; uncertainties of a foreign legal system as the Company is not incorporated in the United States; the impact of foreign currency exchange rates, the impact of higher interest rate and food and fuel prices; further impairments of the Company's goodwill, long-lived assets, equity investments and notes receivable; the Company's ability to recruit, develop and retain high quality personnel; the risks and costs related to cyber security attacks, data breaches, protecting the Company's systems and maintaining integrity and security of the Company's business information, as well as personal data of its guests, employees and others; and pending or threatened litigation, investigations and enforcement actions.

Forward-looking statements should not be relied upon as predictions of actual results. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the Company on the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Royal Caribbean Group

Royal Caribbean Group (NYSE: RCL) is a vacation industry leader with a global fleet of 68 ships across its five brands traveling to approximately 1,000 destinations. With a mission to deliver the best vacations responsibly, Royal Caribbean Group serves millions of guests each year through its portfolio of best-in-class brands, including Royal Caribbean International, Celebrity Cruises, and Silversea; and expanding portfolio of land-based vacation experiences through Perfect Day at CocoCay and Royal Beach Club collection. The company also owns 50% of a joint venture that operates TUI Cruises and Hapag-Lloyd Cruises.

Investor Relations contact: Blake Vanier
Email: bvanier@rccl.com
Media contact: Melissa Castro
Email: corporatecommunications@rccl.com 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/royal-caribbean-group-announces-completion-of-1-5-billion-offering-of-senior-unsecured-notes-to-refinance-existing-indebtedness-302260524.html

SOURCE Royal Caribbean Group

FAQ

What is the interest rate and maturity date of Royal Caribbean's new senior unsecured notes?

Royal Caribbean's new senior unsecured notes have an interest rate of 5.625% and mature on September 30, 2031.

How much debt will Royal Caribbean (RCL) repay with the proceeds from the new notes?

RCL will repay $932 million in debt, including $700 million of 7.250% Senior Notes due 2030 and $232 million of the Silver Dawn finance lease.

Will Royal Caribbean (RCL) have any guaranteed or secured notes outstanding after this refinancing?

No, after redeeming the 7.250% Senior Notes due 2030, RCL will have no remaining guaranteed or secured notes outstanding.

When will Royal Caribbean (RCL) repay the Silver Dawn finance lease?

RCL plans to repay the $232 million Silver Dawn finance lease in full on November 25, 2024.