Royal Caribbean Cruises Toady announced that it has commenced a private offering of senior guaranteed notes due 2029 for an aggregate principal amount of $1.0 billion and a concurrent private offering of senior secured notes due 2029, for an aggregate principal amount of $1.0 billion.
The Company intends to use the proceeds from the sale of the Senior Guaranteed Notes and the Senior Secured Notes, together with cash on hand, to redeem all its outstanding 9.125% Priority Guaranteed Notes due 2023 and 10.875% Senior Secured Notes due 2023, respectively, concurrently with the respective closing of the Senior Guaranteed Notes and Senior Secured Notes offerings (including to pay fees and expenses in connection with such redemptions).
The Senior Guaranteed Notes will be guaranteed on a senior unsecured basis by RCI Holdings LLC, which owns 100% of the equity interests of certain of the Company’s wholly-owned vessel-owning subsidiaries.
The Senior Secured Notes will be guaranteed by Celebrity Cruises Inc., Celebrity Cruises Holdings Inc. and certain of the Company’s wholly-owned vessel-owning subsidiaries. The Senior Secured Notes and the related guarantees will be secured by 26 of the Company’s vessels and material intellectual property of the Company in an amount not to exceed permitted capacity under the Company’s existing indebtedness.
The closing of each offering is not contingent upon the closing of the other offering.
Royal Caribbean Group announced on Monday that it has commenced a private offering of senior convertible notes to be issued by the company due 2025 in an aggregate principal amount of up to $900 million.
In addition, the company intends to grant the initial purchasers an option to purchase up to an additional $135 million principal amount of Convertible Notes.
“The purpose of the offering is to replace some of the existing near-term maturities of convertible bonds with new longer-term convertible bonds in a manner which is non-dilutive to shareholders as described,” said Naftali Holtz, Chief Financial Officer of Royal Caribbean Group.
The cruise company said it intends to use the proceeds from the sale of the Convertible Notes to repurchase a portion of its 2.875% convertible senior notes due November 15, 2023, and 4.25% convertible senior notes due June 15, 2023, through open-market purchases, privately negotiated transactions, tender offers or otherwise. The Company intends to retire any Existing Convertible Notes so purchased.
“The proposed transaction proactively addresses the near-term maturity of our existing convertible notes,” said Holtz. “With the proceeds of this offering, our intention is to opportunistically repurchase the existing convertible notes, and we have the option to settle the remaining notes in cash to address our convertible debt maturities in a manner that is net neutral to our outstanding shares and share equivalents.”
The Convertible Notes will be convertible at the holder’s option in certain circumstances. Upon conversion, the company may satisfy its conversion obligation by paying or delivering, at its election, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock.
Several cruise ships were specifically built to serve the booming Chinese market in the last decade.
Too much capacity followed by COVID-19, in addition to other factors, changing the course of the local business, all of the vessels are now sailing elsewhere.
Here’s what happened to all of the former China-bound newbuilds:
Ovation of the Seas Company: Royal Caribbean International Built: 2016 Capacity: 4,100 guests Tonnage: 158,000 Current Sailing Region: North America
The Ovation of the Seas became the first Royal Caribbean International new build to debut in China when it arrived in Tianjin in 2016.
With several custom-designed features, the Quantum-class ship continued to serve the local market until 2018.
Beginning in 2019, the ship started to alternate summer seasons in North America – where it is currently sailing – and winter seasons in Australia.
Genting Dream Company: Dream Cruises (Genting Cruise Lines) Built: 2016 Capacity: 3,400 guests Tonnage: 150,000 Current Sailing Region: Southeast Asia
With several features to cater to Chinese guests, the Genting-owned cruise ship had already been repositioned out of China when the pandemic broke in 2020.
The vessel, which later became the Norwegian Encore, would add capacity to the local market, which was already being serviced by the 2017-built Norwegian Joy.
The plans, however, were scrapped while the ship was still being built at the Meyer Werft shipyard. Instead of China, the Norwegian Encore debuted in the North American market, where it’s still sailing to this day.
The spectrum of the Seas Company: Royal Caribbean International Built: 2019 Capacity: 4,200 guests Tonnage: 168,666 Current Sailing Region: Southeast Asia
Royal Caribbean International sent a second new build to China in 2019 with the Spectrum of the Seas.
Built-in Italy, the 135,500-ton vessel offers custom-designed features, including a karaoke entertainment complex and larger casino and shopping areas.
Costa Firenze Company: Costa Cruises Built: 2020 Capacity: 4,232 guests Tonnage: 135,500 Current Sailing Region: Mediterranean
A sister to the Costa Venezia, the Costa Firenze was set to debut in China in late 2020. Also, custom-designed to serve the local market, the 4,232-guest cruise ship was equipped with several unique features.
The pandemic, however, forced Costa Cruises to change plans for the vessel. Unable to sail to Asia, the Firenze debuted in Europe in 2021 and has been serving Western markets ever since.
The wonder of the Seas Company: Royal Caribbean International Built: 2022 Capacity: 5,448 guests Tonnage: 227,625 Current Sailing Region: Mediterranean
Currently, the world’s biggest cruise ship, the Wonder of the Seas was originally bound for year-round service in China.
Featuring interior designs and concepts to appeal to the local public, the Royal Caribbean International ship was set to debut in the Chinese market in mid-2021, offering a series of cruises departing from Shanghai.
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