Summary
Royal Caribbean Cruises Ltd. (RCL) announced on May 31, 2006, its intention to undertake several significant financing transactions aimed at simplifying its balance sheet and managing its capital structure. The company plans to redeem its outstanding Liquid Yield Option™ Notes (LYONS) due 2021 at their accreted principal amount, estimated at approximately $543 million. Additionally, RCL anticipates that its zero-coupon convertible notes due 2021 will be converted into common stock by holders prior to redemption, with the company planning a corresponding stock buyback of about 4.1 million shares to offset this issuance. These transactions are expected to be financed through public debt offerings and/or bank financing. Management views this as an opportune moment to streamline financial obligations and proactively address potential future dilution without a material impact on the company's overall debt levels or earnings per share. The company expects these actions, which are subject to market conditions, to be completed by the end of 2006.
Key Highlights
- 1RCL announces intention to redeem all outstanding Liquid Yield Option™ Notes (LYONS) due 2021, estimated at $543 million.
- 2RCL expects holders of zero-coupon convertible notes due 2021 to convert them into common stock prior to redemption.
- 3Company plans a stock buyback of approximately 4.1 million shares to offset shares issued from convertible note conversions.
- 4Financing for these transactions will be sought through public debt offerings and/or bank financing.
- 5Management expects these actions to simplify the balance sheet and eliminate potential future dilution.
- 6Transactions are not expected to materially increase debt levels or impact earnings per share.
- 7Completion of these transactions is anticipated by year-end 2006, depending on market conditions.