Royal Caribbean Cruises talks $1 billion three-year convertibles to yield 5%-5.5%, up 20%-25%

By Abigail W. Adams

Portland, Me., June 4 – Royal Caribbean Cruises Ltd. plans to price $1 billion of three-year convertible notes after the market close on Thursday with price talk for a coupon of 5% to 5.5% and an initial conversion premium of 20% to 25%, according to a market source.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the joint bookrunners on the Rule 144A deal, which carries a greenshoe of $150 million.

The notes are non-callable.

The convertibles will be settled in cash, shares or a combination of both at the company’s option.

Concurrently, the company plans to price $1 billion of senior notes with price talk for a yield in the high 9% to 10% area.

Proceeds will be used for general corporate purposes, which may include the repayment of debt.

Royal Caribbean is a Miami-based cruise ship operator.

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