Carnival sweetens terms of convertibles due 2033 to discourage puts

By Laura Lutz

Des Moines, April 25 - Carnival Corp. & plc announced that it amended the terms of its senior convertible debentures due 2033 to provide incentives to holders who do not exercise a put option on April 29.

The amendments will give holders additional semiannual cash interest payments of 0.5% per year for the next 18 months. Before the amendments, the debentures would not have accrued cash interest after April 29.

Holders were given an additional put option, on Oct. 29, 2009. The terms of that put are otherwise identical to those for the put scheduled for April 29.

Carnival eliminated its ability to call the debentures before Oct. 29, 2009. Before this amendment, the company would have been able to call the debentures at any time beginning on April 29.

An additional conversion price adjustment was added so that, if the company pays cash dividends in excess of $0.40 per share in any quarter, the conversion price of the debentures will be adjusted.

Finally, the company committed to increase the conversion rate for any debentures surrendered in connection with certain change-of-control events or a termination of trading of its stock.

Holders who still choose to put their debentures on April 29 will receive $646.88 in cash per $1,000 principal amount at maturity of debentures.

Carnival is a cruise operator based in Miami.

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