Cruise company Carnival received commitments from lenders to reprice its first-priority senior secured term loan facility maturing in 2028 and its first-priority senior secured term loan facility maturing in 2027. As part of the repricing, the company expects to make a partial prepayment of $500 million under the 2028 term loan and a partial prepayment of $300 million under the 2027 term loan.
After implementation of the repricing, the 2028 term loan will bear interest at a rate per annum equal to SOFR with a 0.75% floor, plus a margin equal to 2.75%. The 2027 term loan will bear interest at a rate per annum equal to SOFR with a 0.75% floor, plus a margin equal to 2.75%.
In addition to the repricing transactions, Carnival priced a private offering of €500 million ($532.5 million) aggregate principal amount of 5.75% senior unsecured notes due 2030. The company expects to use the net proceeds from the notes offering, together with cash on hand, to redeem its €500 million ($532.5 million) 7.625% senior unsecured notes due 2026, resulting in a reduction in interest expense on this outstanding debt of nearly 2%.
The notes offering, the redemption of the unsecured notes and the repricing transactions are a continuation of the company’s ongoing debt and interest expense reduction and capital structure simplification. Together, the reduction in both interest rates and total debt is expected to result in a reduction of net interest expense of more than $30 million for the remainder of 2024 and more than $50 million on an annualized basis.
PJT Partners is serving as independent financial advisor to Carnival.
