Carnival Corporation & plc, the world’s largest cruise shipping group, said that its Panama domiciled and US listed holding company Carnival Corporation has priced a private offering of $1.0 billion aggregate principal amount of its 5.75% convertible senior notes due 2027 as part of its 2024 refinancing plan.
“The Convertible Notes will pay interest semi-annually on June 1 and December 1 of each year, beginning on June 1, 2023, at a rate of 5.75% per year. The Convertible Notes will mature on December 1, 2027, unless earlier repurchased, redeemed or converted,” Carnival said in a statement.
The initial conversion rate per $1,000 principal amount of convertible notes is equivalent to 74.6714 shares of common stock of the company, which is equivalent to a conversion price of approximately $13.39 per share, subject to adjustment in certain circumstances. The initial conversion price represents a premium of approximately 20% over the last reported sale price of the company's common stock on the New York Stock Exchange on November 15, 2022.
Cash redemption provision a novelty
Differing from the company's existing convertible securities, it has a cash redemption provision if the stock price exceeds $17.41 beginning on or after December 5, 2025.
Carnival may redeem for cash all or part of the convertible notes if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days, whether or not consecutive, including the trading day immediately preceding the date on which the company provides notice of redemption, during the 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the company provides notice of redemption.
The redemption price will equal 100% of the principal amount of the convertible notes being redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The company may not redeem the convertible notes prior to December 5, 2025, except in the event of certain tax law changes.
Prior to September 1, 2027 the convertible notes will be convertible at the holder's option only upon satisfaction of certain conditions and during certain periods. 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. Upon conversion, the company will satisfy its conversion obligation by paying or delivering, at its election, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock.
The company has granted the initial purchasers of the convertible notes an option to purchase on or before November 30, 2022, up to an additional $150 million aggregate principal amount of convertible notes.
The Convertible Notes will be fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by Carnival plc and certain of the Company's and Carnival plc's subsidiaries that own or operate vessels and material intellectual property and that guarantee certain of the Company's other indebtedness, including its first-priority secured indebtedness and second-priority secured indebtedness.
The company expects to use the net proceeds of the offering to make principal payments on debt and for general corporate purposes, Carnival said.
