Royal Caribbean Launches $3.3 Billion Bond Offering

Royal Caribbean Cruises launches a $3.3 billion bond offering and will use 28 ships as collateral.
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Royal Caribbean Cruises  (RCL) - Get Report said it had launched a $3.3 billion bond offering on Wednesday and would use 28 of its ships as collateral as the cruise ship operator tries to weather the coronavirus pandemic shutdown.

Shares of the Miami-based company were down nearly 1% to $36.06 on Wednesday morning.

Royal Caribbean said it expects to use the proceeds from the offering to repay its $2.35 billion, 364-day term loan agreement with Morgan Stanley, which was disclosed on March 23. The remainder of the proceeds is expected to be used for general corporate purposes, which could include repayment of other debt.

"The Company estimates its cash burn to be, on average, in the range of approximately $250 million to $275 million per month during a prolonged suspension of operations," Royal Caribbean said in a regulatory filing.

As of April 30, Royal Caribbean said it had liquidity of about $2.3 billion all in the form of cash and cash equivalents. 

The cruise ship industry has been hit hard by the coronavirus pandemic, with outbreaks occurring on several vessels. 

Royal Caribbean said it had announced a voluntary suspension of its global cruise operations from March 13 through at least June 11, and Alaska sailings at least until June 30.

Last week, rival Norwegian Cruise Line Holdings  (NCLH) - Get Report said it raised more than $2 billion to outlast the economic impact of the coronavirus for at least the next year. The company also filed a Form 8-K with the Securities and Exchange Commission indicating doubt that it would be able to continue as a going concern.