Royal Caribbean wraps debt refis, extends maturities, cuts principal

By Devika Patel

Knoxville, Tenn., April 29 – Royal Caribbean Group has completely revamped its balance sheet with several debt refinancings and extensions, as well as a sale of debt that funded the repayment of maturing debt and bank debt.

The company has raised approximately $12.3 billion through a combination of bond issuances, common stock offerings and other loan facilities. These include a $1.5 billion equity offering at $91 per share and $1.5 billion of 5½% senior unsecured notes due 2028, the proceeds of which have been and will be used to repay principal on debt maturing or required to be paid in 2021 and 2022.

“During the first quarter of 2021, we continued our efforts to enhance our liquidity position and manage our maturity profile,” executive vice president and chief financial officer Jason Liberty said on the company’s first quarter ended March 31 earnings conference call on Thursday.

“To this end, we successfully executed two capital raises with cumulative gross proceeds of $3 billion,” he said.

In addition, Royal Caribbean amended its $1 billion term loan due April 2022 to extend the maturity date by 18 months and repaid $138.5 million of principal on the facility using proceeds from the senior notes.

The company also amended its $1.55 billion revolving credit facility due October 2022 to extend the maturity date by 18 months and repaid $277.6 million of principal on the facility using proceeds from the senior notes.

“Connected to this, we amended two debt facilities totaling approximately $2.5 billion which were due in 2022 and extended the maturities for consenting lenders by 18 months,” Liberty said.

“I will highlight that since we are refinancing guaranteed debt with unsecured and unguaranteed debt, we are starting our journey back to an unencumbered investment-grade balance sheet,” he said.

During the quarter, Royal Caribbean also completed amendments to its export credit facilities, which in total defer $1.15 billion of principal amortization due before April 2022 and waive financial covenants through at least the end of the third quarter of 2022.

“We also completed the amendments to our export credit facilities, deferring $1.15 billion of principal amortization and waiving financial covenants through at least the end of the third quarter of 2022,” Liberty said.

As of March 31, the scheduled debt maturities for the remainder of 2021 and 2022 are $200 million and $2.2 billion, respectively.

“After all these negotiations, our scheduled debt maturities for the remainder of 2021 and 2022 are $200 million and $2.2 billion, respectively, Liberty said.

The company also amended the majority of its commercial bank facilities and credit card agreements to waive financial covenants through at least the end of the third quarter of 2022.

“All together, during this quarter we paid down approximately $800 million of debt related to principal on the amended facilities and the U.K. commercial paper programs that were due in March,” Liberty said.

However, due to the company restarting operations, which was not included in its previous projections, its average monthly cash burn rose to $300 million, higher than projections had predicted.

“The average monthly cash burn was approximately $300 million, which was slightly higher than [our] previously announced range,” Liberty said.

“This was merely driven by restart expenses, which were related to the new health protocols and some crew movements,” he said.

Overall, management is pleased with how the recovery is going, but stressed that things could change at any time.

“We are very encouraged with the latest news, current momentum and the restart of operations around the globe, but the environment remains extremely fluid,” Liberty said.

As of March 31, the company had approximately $5.8 billion of liquidity, including $5.1 billion in cash and cash equivalents and a $700 million commitment for a 364-day facility.

On March 24, Royal Caribbean priced an upsized $1.5 billion issue of seven-year senior bullet notes (B2/B) at par to yield 5½% in a drive-by.

The issue size increased from $1.25 billion.

The yield printed at the tight end of the 5½% to 5¾% yield talk and well inside of initial guidance in the high 5% to 6% area.

BofA Securities Inc. was the left bookrunner.

Senior joint bookrunners were Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., Scotia Capital (USA) Inc., DNB, SMB, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Truist Securities Inc. Junior joint bookrunners were Mizuho Securities USA Inc., Fifth Third Securities Inc., HSBC Securities (USA) Inc., R. Seelaus & Co. Inc., Santander Investment Securities Inc., PNC Capital Markets LLC and BNP Paribas Securities Corp.

The Miami-based cruise vacation company, formerly Royal Caribbean Cruises Ltd., earmarked the proceeds to make principal payments on debt maturing or required to be paid in 2021 and 2022, with the remaining proceeds to be used for general corporate purposes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.