Royal Caribbean Cruises Ltd. (NYSE: RCL) stocks had a big rally recently but that rally is not going to last forever. Even though RCL shares are running high on news that USA is opening, Q2 results and furthermore Q3 expectations might turn away investors. Because no one knows how and when will cruise ships get back with full vessels.
RCL today announced that it has priced its concurrent private offerings of $1.0 billion aggregate principal amount of 9.125% Senior Guaranteed Notes due 2023, and $1.0 billion aggregate principal amount of 4.250% Convertible Senior Notes due 2023.
The Senior Notes will mature on June 15, 2023. The Senior Notes will be fully and unconditionally guaranteed on a senior unsecured basis by a newly formed company, direct wholly-owned subsidiary of RCL that will own all the equity interests in the Company’s subsidiaries that own seven of the Company’s vessels.
So, what they are saying is that RCL will not take more debt by itself, it is this NEW company (subsidiary) owned by RCL that will guarantee for that debt with its 7 vessels.
The initial conversion rate per $1,000 principal amount of Convertible Notes is 13.8672 shares of common stock of the Company, which is equivalent to an initial conversion price of approximately $72.11 per share, subject to adjustment in certain circumstances. The initial conversion price represents a conversion premium of approximately 25.00% to the last reported sale price of $57.69 per share of the Company’s common stock on NYSE on June 4, 2020.
With this debt, even though Royal Caribbean have enough money for the next 12 months, RCL is being cautious as they probably expect that even after 12 months thing won’t be back to normal.