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ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (Oct 6, 2022)

Filed October 6, 2022For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) announced the successful completion of two concurrent private offerings on October 6, 2022, raising a total of approximately $1.984 billion in net proceeds. These funds are earmarked for the redemption of its outstanding 9.125% senior guaranteed notes due 2023 and 10.875% senior secured notes due 2023, both with a principal amount of $1.0 billion each. The offerings consisted of $1.0 billion in 9.250% senior guaranteed notes due 2029 and $1.0 billion in 8.250% senior secured notes due 2029. This strategic move aims to refinance existing debt, potentially lowering interest expenses and extending maturity profiles. The Senior Guaranteed Notes are backed by RCI Holdings LLC, while the Senior Secured Notes have guarantees from Celebrity Cruises Holdings Inc. and other subsidiaries, and are secured by specific assets including intellectual property and vessel interests, though with limitations on the secured amount.

Key Highlights

  • 1RCL completed concurrent private offerings of $1 billion each in Senior Guaranteed Notes (9.250% due 2029) and Senior Secured Notes (8.250% due 2029).
  • 2The company raised approximately $1.984 billion in net proceeds from these offerings.
  • 3Proceeds will be used to redeem all outstanding $1.0 billion aggregate principal amount of 9.125% senior guaranteed notes due 2023 and $1.0 billion aggregate principal amount of 10.875% senior secured notes due 2023.
  • 4The Senior Guaranteed Notes are guaranteed by RCI Holdings LLC.
  • 5The Senior Secured Notes are guaranteed by Celebrity Cruises Holdings Inc., Celebrity Cruises Inc., and certain vessel-owning subsidiaries.
  • 6The Senior Secured Notes are secured by specific assets, including intellectual property and equity interests in vessel-owning subsidiaries, but with a capped secured amount not exceeding $270 million.
  • 7The new notes mature on January 15, 2029, and interest is payable semi-annually.

Frequently Asked Questions

The primary purpose of these offerings is to refinance existing debt. RCL is using the proceeds to redeem its outstanding 9.125% senior guaranteed notes due 2023 and 10.875% senior secured notes due 2023, effectively extending its debt maturity profile and potentially managing its interest expenses.

RCL is refinancing $2.0 billion in aggregate principal amount of existing notes ( $1.0 billion of each series). The new debt consists of $1.0 billion of 9.250% senior guaranteed notes due 2029 and $1.0 billion of 8.250% senior secured notes due 2029, maturing on January 15, 2029.

The Senior Secured Notes are backed by a pledge of equity interests in certain wholly-owned vessel-owning subsidiaries, mortgages on specific vessels, and assignments of insurance and earnings. However, the Indenture specifies that the obligations under the Senior Secured Notes and related guarantees are secured by collateral in an amount not to exceed the difference between $1.662 billion less amounts payable with respect to the 2025 Secured Notes, and in no event shall the secured amount exceed $270 million.

The Indentures contain covenants that restrict RCL and its subsidiaries from incurring additional debt, consummating certain asset sales, creating liens, and consolidating or transferring substantially all of their assets. Additionally, upon specified change of control triggering events, RCL may be required to offer to repurchase the Notes at 101% of their principal amount.