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Royal Caribbean prices offerings of shares, convertible notes

CRUISE Royal Caribbean Group logo.jpg
Royal Caribbean Group priced its underwritten public offering of 8.3m shares at $60 per share, and its $500m offering of convertible senior notes due 2023 at 2.875%.

The last reported cost of RCL common stock on the pricing date was $60.61 per share.

The shares of common stock and the convertible notes are expected to be issued on or around Oct. 16.

Use of proceeds

As earlier reported, the company expects to use a portion of the net proceeds from the convertible notes offering to repay its 2.65% senior notes due 2020, with the remainder to be used for general corporate purposes.

Net proceeds from the equity offering will be used for general corporate purposes.

William Blair's assessment of liquidity

As of Sept. 30, Royal Caribbean had total liquidity of $3.7bn. Monthly cash burn during the third quarter was consistent with previous expectations of $250m to $290m, excluding certain items such as cash refunds of customer deposits (deposits remained similar to the $1.8bn as of the end of June).

Assuming the stock and notes offerings are successful and a 50% potential refund scenario for deposits for canceled voyages, similar to the last six months, William Blair estimates Royal Caribbean has adequate liquidity to sustain operations for at least eight months in a zero-revenue environment, analyst Sharon Zackfia said in a note.

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