Carnival Corp plans to save $120m a year in interest payments on its debt by replacing $1.2bn in high-cost debt with $1.5bn in new cheaper secured debt.
The New York-listed cruise giant said that it intends to assume a new senior secured first-lien term-loan facility with an original principal amount of $1bn that is expected to mature in 2027.
Josh Weinstein-led firm said it may also raise $500m of other secured debt maturing in 2029.
The owner of 95 ships plans to use the $1.5bn in borrowed money to repay $1.2bn in of an existing first-priority senior secured term loan facility maturing in 2025.
Specifically, Carnival intends to pay off all 10.5% second-priority senior secured notes and 10.125% second-priority senior secured notes due 2026.
This move is expected to save the company more than $120m a year in interest expenses, Carnival said.
“Given the confidence we have in our business and its cash flow generation, we plan to retire $1.2bn of our highest cost debt,” chief financial officer David Bernstein said in a statement.
“In connection with this retirement, we plan to extend some of the lowest cost public debt in our portfolio.”
Carnival said it expects its pandemic-caused debt to be less than $32bn by the end of this year, down from a peak of $35.1bn at the end of February 2023.
“This is yet another step forward in our deleveraging journey, building on the $1.4 billion we already early retired this year,” Bernstein said.
