Carnival Corporation Announces Redemption of Debt and Refinancing Transactions
Carnival Corporation, the biggest cruise company worldwide, has effectively completed its private sale of $500 million in senior secured bonds maturing in 2029 and a $1.3 billion loan facility with the primary claim. The funds acquired from these refinancing deals will be utilized to repay a part of the firm's current liabilities.
The senior secured notes with a 7.00% interest rate will provide interest payments twice a year, starting on February 15, 2024, and will reach maturity on August 15, 2029. Carnival plc and other subsidiary companies of the organization will fully guarantee these notes. They will be backed by various forms of collateral, such as subsidiary guarantors' capital stock, vessel mortgages, intellectual property, and other assets related to the vessels.
The brand-new primary debt agreement will accrue interest at an annual rate matching SOFR, with a minimum limit of 0.75%, alongside an additional 3.00% margin. Its maturity date is set for 2027, and it shares identical guarantors and collateral as the senior notes with security.
Alongside the refinancing deals, Carnival Corporation has sent out conditional notifications for the redemption of its remaining $775 million second-priority senior secured notes, which are due in 2026, as well as the €425 million second-priority senior secured notes, also due in 2026. These redemptions are set to occur on August 11 and August 12, 2023, respectively.
The company stands to gain substantial interest expense savings by redeeming these notes. Carnival Corporation forecasts a yearly saving of over $120 million in interest expenses.
The decision to refinance and pay off debts shows that Carnival Corporation is devoted to handling its financial responsibilities and boosting its overall financial situation. By taking these measures, the company aims to fortify its available funds and improve its capacity to handle the difficulties brought about by the COVID-19 pandemic and the revival of the cruise industry.
