Royal Caribbean calls LYONS due 2021; First Choice Holidays to redeem convertible preferreds

By Jennifer Chiou

New York, July 27 - Royal Caribbean Cruises Ltd. said it will receive $348 million in cash from First Choice Holidays plc's redemption of its 6.75% convertible preferred shares and announced its own partial redemption of its Liquid Yield Option Notes due Feb. 2, 2021.

The company expects most of its $182 million accreted balance of LYONs will be converted into stock ahead of the Aug. 11 redemption date. The notes are convertible into shares of Royal Caribbean at 11.7152 shares per LYON, which would result in the issuance of about 4.5 million shares.

For noteholders who do not convert their holdings, the redemption price is $474.64 per LYON.

After First Choice's redemption, Royal Caribbean, a Miami-based cruise company, will collect a gain of $44.2 million, or $0.19 per share, but will no longer receive quarterly dividends of about $6.0 million on the preferreds, cutting its 2005 earnings per share by about $0.04.

Royal Caribbean, an investor in First Choice for five years, has a joint venture cruise line - Island Cruises - with the Manchester, England, travel company.

Royal Caribbean also said its net income for the second quarter was $154.5 million, or $0.71 per share, up from 2004's second quarter return of $122.2 million, or $0.58 per share.

The company added it intends to repurchase up to $250 million of its stock after the LYONs are redeemed.

In May, Royal Caribbean amended its unsecured revolving credit facility to extend the maturity to March 27, 2010 and reduce borrowing costs.

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