Carnival Corp plans to sell $2bn in debt without backing from assets for the first time since the Covid-19 downturn.
The New York and London-listed owner of 87 ships has priced the private offerings of $1.45bn and €500m ($593m) in 7.625% senior unsecured notes due 2026.
The amount of notes to be issued was increased to these amounts from a previously announced $1bn and €300m, Carnival said.
The offering is expected to close on 25 November and will pay 7.625% interest semi-annually on 1 March and 1 September of each year, beginning on 1 March 2021.
The notes will be unsecured and will mature on 1 March 2026.
Carnival earlier this year reached a secured-debt limit after selling nearly $9bn in asset-backed bonds and loans.
Carnival on Thursday said it priced a registered direct offering of 10.4m shares of common stock at $17.59 each due in 2023. It plans to use the funds to repurchase $90.8m in principal debt from the bondholders.
It also said it had closed an offering of 49.2m shares at $18.05 each to certain holders of 5.75% convertible senior notes due in 2023. It will use these proceeds to repurchase $428m of bondholder debt.
It expects to close another 8.2m shares as part of the offering on Friday and use the funds from this transaction to repurchase $71.5m in convertible notes.
Following these repurchases, Carnival will have $628m in convertible notes outstanding.
In mid-July, the Arnold Donald-led company reached a self-imposed 25% loan-to-value (LTV) ratio limit on first-priority notes by putting $7bn-worth of them against $28bn in assets as collateral.
In early April, Miami-based Carnival closed a private offering of $4bn of 11.5% first-priority senior notes due 2023, backed by 86 vessels worth $28.6bn.
On 20 July, it closed private offerings of $775m and €425m ($503m) of secured notes due in 2026, and then priced a private offering of $900m in secured debt due 2027.
Carnival sold six of the collateral vessels, however, bringing the collateral value, backed now by 80 ships, down to $28bn as of 31 July.
A month earlier, it took out a $1.86bn term loan and an €800m term loan to help pay off the 2027 notes.
Paying debt with debt
In the midst of all the debt shuffling, Carnival drafted a provision that triggers automatic release of liens on the 80 ships backing the secured debt if 25% of secured debt reaches tangible asset value.
Carnival, which did not return calls, actually neared that threshold as secured debt stands at $10.6bn, while 25% of tangible-asset value comes in at $12.4bn.
Carnival will most likely chase more debt after delaying the return of North American brands Carnival Cruise Line and Princess Cruises to sailing amid US rules for cruiseships in US waters.
The US Centers for Disease Control and Prevention (CDC) on 30 October lifted a US no-sail order but then issued a "Framework for Conditional Sailing" that requires simulated voyages.
