Item 1.01 Entry into Material Definitive Agreements.
6.00% Convertible Senior Notes due 2025
On August 8, 2022, Royal Caribbean Cruises Ltd. (the "Company") completed its
previously announced private offering (the "Offering") of $1.15 billion
aggregate principal amount of 6.00% Convertible Senior Notes due 2025 (the
"Convertible Notes"), including $150 million aggregate principal amount of the
Convertible Notes issued pursuant to the exercise in full of the initial
purchasers' option to purchase additional Convertible Notes. The Company
received gross proceeds from the offering of $1.15 billion, which it used to
repurchase $800 million aggregate principal amount of its 4.25% convertible
senior notes due June 15, 2023 and $350 million aggregate principal amount of
its 2.875% convertible senior notes due November 15, 2023 (the "Existing
Convertible Notes") in privately negotiated transactions. The Company retired
the Existing Convertible Notes so repurchased.
The Convertible Notes were issued by the Company pursuant to an indenture, dated
August 5, 2022 (the "Indenture"), between the Company and The Bank of New York
Mellon Trust Company, N.A., as trustee, paying agent, registrar, custodian and
conversion agent. Interest on the Convertible Notes accrues from August 5, 2022
and is payable semi-annually in arrears on February 15 and August 15 of each
year, beginning on February 15, 2023, at a rate of 6.00% per year. The
Convertible Notes will mature on August 15, 2025, unless earlier converted,
redeemed pursuant to a tax redemption or repurchased.
The Company may redeem all, but not part, of the Convertible Notes upon the
occurrence of specified tax events set forth in the Indenture. Other than in
connection with such specified tax events, the Company may not redeem the
Convertible Notes.
The initial conversion rate per $1,000 principal amount of Convertible Notes is
19.9577 shares of common stock of the Company (the "Common Stock"), which is
equivalent to an initial conversion price of approximately $50.11 per share,
subject to adjustment in certain circumstances. Prior to May 15, 2025, the
Convertible Notes will be convertible at the option of holders of the
Convertible Notes during certain periods, upon satisfaction of certain
conditions. Thereafter, the Convertible Notes will be convertible at any time
until the close of business on the second scheduled trading day immediately
preceding the maturity date of the Convertible Notes. Upon conversion, the
Convertible Notes may be settled in shares of the Company's common stock, cash
or a combination of cash and shares of the Company's common stock, at the
Company's election.
Holders of the Convertible Notes may require the Company, upon the occurrence of
certain events that constitute a fundamental change under the Indenture, to
offer to repurchase the Convertible Notes at a repurchase price equal to 100% of
the principal amount thereof, plus accrued and unpaid interest, if any, to, but
excluding, the repurchase date. In connection with certain corporate events or
if the Company issues a notice of tax redemption, it will, under certain
circumstances, increase the conversion rate for holders of the Convertible Notes
who elect to convert their Convertible Notes in connection with such corporate
event or for holders of the Convertible Notes whose Convertible Notes are called
for tax redemption and convert their Convertible Notes during the relevant
redemption period. The Indenture also contains customary events of default.
The Convertible Notes were offered and sold in a private offering that was
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"). The Convertible Notes were offered within the
United States only to persons reasonably believed to be qualified institutional
buyers in accordance with Rule 144A under the Securities Act. The Convertible
Notes have not been registered under the Securities Act or the securities laws
of any other jurisdiction. Unless so registered, the Convertible Notes may not
be offered or sold in the United States except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the Securities
Act and applicable state securities laws.
The Indenture is filed as Exhibit 4.1 to this Current Report on Form 8-K and is
incorporated herein by reference. The above descriptions of the material terms
of the Indenture and the Convertible Notes are qualified in their entirety by
reference to such exhibit.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is incorporated into this Item
2.03 by reference.
Item 3.02 Unregistered Sale of Equity Securities.
The information required by Item 3.02 relating to the sale of the Convertible
Notes is contained in Item 1.01 of this Current Report on Form 8-K and
incorporated herein by reference.
The Company offered and sold the Convertible Notes to the initial purchasers in
reliance on the exemption from registration provided by Section 4(a)(2) of the
Securities Act, and for resale by the initial purchasers to qualified
institutional buyers pursuant to the exemption from registration provided by
Rule 144A under the Securities Act. The Company relied on these exemptions from
registration based in part on representations made by the initial purchasers in
the purchase agreement relating to the Offering. The shares of Common Stock
issuable upon conversion of the Convertible Notes, if any, have not been
registered under the Securities Act and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements.
Item 8.01 Other Events.
Press Release
On August 8, 2022, the Company issued a press release announcing the closing of
the Offering. A copy of the press release is furnished as Exhibit 99.1 hereto
and incorporated by reference herein.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this Current Report on Form 8-K relating to, among other
things, our future performance estimates, forecasts and projections constitute
forward-looking statements under the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited, to: statements regarding
revenues, costs and financial results for 2022 and beyond. Words such as
"anticipate," "believe," "could," "driving," "estimate," "expect," "goal,"
"intend," "may," "plan," "project," "seek," "should," "will," "would,"
"considering," and similar expressions are intended to help identify
forward-looking statements. Forward-looking statements reflect management's
current expectations, are based on judgments, are inherently uncertain and are
subject to risks, uncertainties and other factors, which could cause our actual
results, performance or achievements to differ materially from the future
results, performance or achievements expressed or implied in those
forward-looking statements. Examples of these risks, uncertainties and other
factors include, but are not limited to, the following: the impact of the global
incidence and continued spread of COVID-19, which has had and will continue to
have a material adverse impact on our business, liquidity and results of
operations, or other contagious illnesses on economic conditions and the travel
industry in general and the financial position and operating results of our
Company in particular, such as: governmental and self-imposed travel
restrictions and guest cancellations; our ability to obtain sufficient
financing, capital or revenues to satisfy liquidity needs, capital expenditures,
debt repayments and other financing needs; the effectiveness of the actions we
have taken to improve and address our liquidity needs; the impact of the
economic and geopolitical environment on key aspects of our business including
the conflict between Ukraine and Russia, such as the demand for cruises,
passenger spending, and operating costs; incidents or adverse publicity
concerning our ships, port facilities, land destinations and/or passengers or
the cruise vacation industry in general; concerns over safety, health and
security of guests and crew; our COVID-19 protocols and any other health
protocols we may develop in response to infectious diseases may be costly and
less effective than we expect in reducing the risk of infection and spread of
such disease on our cruise ships; further impairments of our goodwill,
long-lived assets, equity investments and notes receivable; an inability to
source our crew or our provisions and supplies from certain places; an increase
in concern about the risk of illness on our ships or when travelling to or from
our ships, all of which reduces demand; unavailability of ports of call; growing
anti-tourism sentiments and environmental concerns; changes in U.S. foreign
travel policy; the uncertainties of conducting business internationally and
expanding into new markets and new ventures; our ability to recruit, develop and
retain high quality personnel; changes in operating and financing costs; our
indebtedness, any additional indebtedness we may incur and restrictions in the
agreements governing our indebtedness that limit our flexibility in operating
our business; the impact of foreign currency exchange rates, the impact of
higher interest rate and fuel prices; the settlement of conversions of our
convertible notes, if any, in shares of our common stock or a combination of
cash and shares of our common stock, which may result in substantial dilution
for our existing shareholders; our expectation that we will not declare or pay
dividends on our common stock for the near future; vacation industry competition
and changes in industry capacity and overcapacity; the risks and costs related
to cyber security attacks, data breaches, protecting our systems and maintaining
integrity and security of our business information, as well as personal data of
our guests, employees and others; the impact of new or changing legislation and
regulations or governmental orders on our business; pending or threatened
litigation, investigations and enforcement actions; the effects of weather,
natural disasters and seasonality on our business; the impact of issues at
shipyards, including ship delivery delays, ship cancellations or ship
construction cost increases; shipyard unavailability; the unavailability or cost
of air service; and uncertainties of a foreign legal system as we are not
incorporated in the United States.
In addition, many of these risks and uncertainties are currently heightened by
and will continue to be heightened by, or in the future may be heightened by,
the COVID-19 pandemic. It is not possible to predict or identify all such risks.
The forward-looking statements included in this Current Report on Form 8-K speak
only as of the date of this Current Report on Form 8-K. Given these risks and
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. Except as required by law, we undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. You should consider
the areas of risk described above, as well as those set forth under the heading
"Risk Factors" in our Annual Report on Form 10-K for the year ended December 31,
2021, those set forth under the heading "Risk Factors" in our Quarterly Reports
on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, copies of
which may be obtained by visiting our Investor Relations website at
www.rclinvestor.com or the SEC's website at www.sec.gov.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit 4.1 - Indenture, dated August 5, 2022, between the Company and The
Bank of New York Mellon Trust Company, N.A., as trustee, paying agent,
registrar, custodian and conversion agent.
Exhibit 99.1 - Press release dated August 8, 2022.
Exhibit 104 - Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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