8-KMaterial AgreementsFinancial EventsSecurities & Listing+2

ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (Oct 16, 2020)

Filed October 16, 2020For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) announced the successful completion of two significant financing events on October 16, 2020. The company raised approximately $500 million in aggregate principal amount through a private offering of 2.875% Convertible Senior Notes due 2023. A portion of these proceeds are earmarked for repaying the company's 2.650% Senior Notes due 2020, with the remainder allocated to general corporate purposes. This move signals a proactive approach to managing its debt obligations and bolstering its financial flexibility during a challenging period for the travel industry. In addition to the debt issuance, RCL also completed an equity offering, selling 8,333,333 shares of common stock and realizing net proceeds of approximately $484.6 million. These funds are also designated for general corporate purposes. Both offerings were conducted as private placements (Convertible Notes) or under a registered shelf (Equity Offering) and highlight the company's efforts to secure capital to navigate the ongoing impacts of the COVID-19 pandemic and position itself for future recovery.

Key Highlights

  • 1Completed a $500 million private offering of 2.875% Convertible Senior Notes due 2023.
  • 2Intends to use a portion of convertible note proceeds to repay 2.650% Senior Notes due 2020.
  • 3Received approximately $487.2 million in net proceeds from the convertible notes offering.
  • 4Completed an equity offering of 8,333,333 shares of common stock.
  • 5Net proceeds from the equity offering amounted to approximately $484.6 million.
  • 6Funds from both offerings will be used for general corporate purposes.
  • 7Convertible notes are convertible into common stock at an initial price of $82.50 per share, subject to adjustments.

Frequently Asked Questions

The primary purpose of the 2.875% Convertible Senior Notes due 2023 is to raise capital. A portion of the proceeds will be used to repay the company's maturing 2.650% Senior Notes due 2020, and the remainder will support general corporate purposes, providing financial flexibility.

Royal Caribbean raised approximately $487.2 million in net proceeds from the convertible notes offering and approximately $484.6 million in net proceeds from the equity offering, totaling nearly $971.8 million in combined gross proceeds.

The 2.875% Convertible Senior Notes due 2023 mature on November 15, 2023. They are convertible into Royal Caribbean common stock at an initial conversion rate of 12.1212 shares per $1,000 principal amount, implying an initial conversion price of approximately $82.50 per share. Conversion is permitted under certain conditions prior to August 15, 2023, and at any time thereafter until shortly before maturity. The company has the option to settle conversions in cash, shares, or a combination thereof.

The equity offering dilutes existing shareholders by issuing new shares. The convertible notes also have the potential to dilute shareholders if they are converted into common stock. However, these offerings provide crucial liquidity for the company, which is important for its long-term viability and eventual recovery, potentially benefiting shareholders in the long run.