Royal Caribbean Group announces proposed offering of senior unsecured notes to refinance existing indebtedness

Rhea-AI Summary

Royal Caribbean Cruises (NYSE: RCL) has announced a private offering of $1.0 billion in senior unsecured notes due 2031. The company plans to use the proceeds to refinance existing debt, including:

• Redeeming all outstanding 7.250% Senior Notes due 2030
• Repaying the Silver Dawn finance lease in full

This move will eliminate all of RCL's remaining guaranteed indebtedness. The notes are being offered only to qualified institutional buyers and certain non-U.S. persons, and will not be registered under the Securities Act. Any excess proceeds may be used to temporarily repay revolving credit facility borrowings.

Positive

• Refinancing $1.0 billion of debt, potentially at lower interest rates
• Eliminating all remaining guaranteed indebtedness
• Potential reduction in overall debt obligations

Negative

• Increasing long-term debt with new $1.0 billion note offering
• Potential increase in interest expenses depending on new notes' terms

Insights

Financial Analyst

Royal Caribbean's proposed $1.0 billion senior unsecured notes offering is a strategic move to refinance existing debt. This action aims to optimize the company's capital structure by replacing higher-cost debt with potentially lower-cost financing. The plan to redeem the 7.250% Senior Notes due 2030 could result in interest expense savings, improving profitability.

Notably, the company will have no remaining guaranteed indebtedness after this transaction, which could enhance financial flexibility. The repayment of the Silver Dawn finance lease further streamlines the balance sheet. However, investors should monitor the new notes' interest rate to assess the net financial impact.

Market Research Analyst

This refinancing move by Royal Caribbean signals confidence in the cruise industry's recovery. The company's ability to issue unsecured notes suggests improved market perception of its creditworthiness. The cruise sector has faced significant challenges post-pandemic and this transaction may indicate stronger financial footing for Royal Caribbean.

Investors should consider the potential positive market reaction to this news, as it demonstrates proactive financial management. However, it's important to contextualize this within broader industry trends and compare with competitors' financial strategies to gauge relative strength.

Legal Expert

The offering's structure as a private placement to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S is a common approach for expedited fundraising. This method allows Royal Caribbean to avoid the more time-consuming SEC registration process required for public offerings.

Investors should note that these notes will have liquidity in the secondary market due to transfer restrictions. The company's explicit statement that this press release doesn't constitute an offer to sell or a redemption notice is a standard legal precaution to avoid potential securities law violations.

MIAMI, Sept. 16, 2024 /PRNewswire/ -- Royal Caribbean Cruises Ltd. (NYSE: RCL) (the "Company") today announced that it has commenced a private offering of $1.0 billion aggregate principal amount of senior unsecured notes due 2031 (the "Notes").

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 its outstanding 7.250% Senior Notes due 2030, after which the Company will have no remaining guaranteed indebtedness; and (ii) to repay in full all outstanding obligations under its Silver Dawn finance lease (including to pay fees and expenses in connection with each of the foregoing). Pending such uses, the Company may apply some of the proceeds to temporarily repay borrowings under its revolving credit facilities.

The Notes are being 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 to Regulation S. The Notes will not be 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. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

Special Note Regarding Forward-Looking Statements

Certain statements in this press release relating to, among other things, the offering and 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 terms of the offering of the Notes and the intended use of proceeds. 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

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SOURCE Royal Caribbean Group

FAQ

What is the purpose of Royal Caribbean's $1.0 billion note offering announced on September 16, 2024?

Royal Caribbean (RCL) is offering $1.0 billion in senior unsecured notes due 2031 to refinance existing debt, including redeeming all outstanding 7.250% Senior Notes due 2030 and repaying the Silver Dawn finance lease in full.

How will Royal Caribbean's debt structure change after this note offering?

After the note offering, Royal Caribbean (RCL) will have no remaining guaranteed indebtedness, as they plan to redeem all outstanding 7.250% Senior Notes due 2030 and repay the Silver Dawn finance lease.

Who is eligible to purchase Royal Caribbean's newly offered notes?

Royal Caribbean's (RCL) new notes are being offered only to qualified institutional buyers under Rule 144A and certain non-U.S. persons under Regulation S. They are not available for purchase by the general public.

Will Royal Caribbean's new notes be registered under the Securities Act?

No, Royal Caribbean's (RCL) new notes will not be registered under the Securities Act or any state securities laws. They can only be sold under exemptions from registration requirements.