Extends liquidity runway to at least 12 months
With RCL's monthly cash burn estimated at $260m to $285m, including interest expense and necessary capital expenditures but excluding cash refunds of deposits and inflows from new and existing bookings, the additional capital raise adds approximately seven months to the company's liquidity runway in a zero-revenue environment, William Blair analyst Sharon Zackfia said. This effectively funds the company for at least another 12 months.
Guaranteed by seven ships with $7.7bn book value
The senior notes will mature on June 15, 2023. They will be fully guaranteed on a senior unsecured basis by a newly formed, direct wholly owned subsidiary of the company. This subsidiary will own all the equity interests in the RCL subsidiaries that own seven ships with a total book value of $7.7bn.
The convertible notes will mature on June 15, 2023, unless earlier converted, redeemed pursuant to a tax redemption or repurchased. The initial conversion rate per $1,000 principal amount of convertible notes is 13.8672 shares of common stock, which is equivalent to an initial conversion price of approximately $72.11 per share. This is subject to adjustment in certain circumstances.
25% premium to June 4 stock price
The initial conversion price represents an approximately 25% premium to the Thursday's closing price of $57.69 per share.
The notes will be convertible at the holder's option in certain circumstances. RCL may satisfy its conversion obligation by paying or delivering, at its election, cash, shares of common stock or a combination of cash and shares.
Option for up to $150m in additional convertible notes
RCL also granted certain of the initial purchasers a 13-day option to buy up to an additional $150m in convertible notes. These are expected to be issued on or around June 9.
Net proceeds from the offerings are expected to be used for general corporate purposes, which may include repaying debt.