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Royal Caribbean prices upsized $1b convertible notes offering

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The transaction is intended to be net neutral to outstanding shares and share equivalents, CFO Naftali Holtz said
Royal Caribbean Group priced its upsized offering of $1b 6% convertible senior notes due 2025.

Certain initial purchasers will be granted a 13-day option to purchase up to an additional $150m in notes.

The offering is expected to close Aug. 5.

The original offering was for $900m in notes with an option for up to $135m in additional notes.

Use of proceeds

Royal Caribbean intends to use the proceeds to buy back a portion of its 2.875% convertible senior notes due Nov. 15, 2023, and 4.25% convertible senior notes due June 15, 2023, through open-market purchases, privately negotiated transactions, tender offers or otherwise. Any existing convertible notes purchased will be retired.

'The transaction is intended to be net neutral to our outstanding shares and share equivalents after taking into account our ability to settle any remaining outstanding notes with cash,' CFO Naftali Holtz said.

Initial conversion price represents a 40% premium

The convertible notes will mature on Aug. 15, 2025 unless earlier converted, redeemed pursuant to a tax redemption or repurchased. The initial conversion rate per $1,000 principal amount of convertible notes is 19.9577 shares of common, which is equivalent to an initial conversion price of approximately $50.11 per share, subject to adjustment in certain circumstances. This initial conversion price represents a premium of approximately 40% over the last reported sale price for RCL stock on Aug. 1.

Royal Caribbean may elect to satisfy its obligation by cash, common shares or a combination of cash and shares.

The notes are being offered only to qualified institutional investors outside the US.

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