8-KMaterial AgreementsFinancial Events

CARNIVAL CORP 8-K Report, Material Agreement (Oct 27, 2005)

Filed October 27, 2005For Securities:CCL

Summary

Carnival Corporation (CCL) announced the entry into a new five-year, multi-currency credit facility agreement totaling approximately US$1.2 billion, €400 million, and £200 million, effective October 21, 2005. This new facility replaces three previous agreements, including a US$1.4 billion revolving credit facility that was terminated concurrently. The new agreement offers greater flexibility and a slightly lower interest margin based on CCL's credit rating. This strategic move provides Carnival with a robust funding source for general corporate purposes, supports commercial paper borrowings, and allows for the issuance of bonds and letters of credit up to US$700 million. The terms include financial covenants related to consolidated shareholders' equity, borrowed monies, and EBITDA-to-interest coverage, which are customary for such agreements. Importantly, the facility does not contain credit rating-based default triggers or material adverse change clauses, offering increased stability.

Key Highlights

  • 1New 5-year, multi-currency credit facility totaling approximately US$1.2B, €400M, and £200M entered into on October 21, 2005.
  • 2The new facility replaces three prior credit agreements, including the termination of a US$1.4B revolving credit agreement.
  • 3Borrowings bear interest at LIBOR/EURIBOR plus a margin of 0.175%, based on CCL's credit rating.
  • 4Includes a commitment fee (0.0525%) on unused commitments and a utilization fee (0.05%) if outstanding amounts exceed 50% of commitments.
  • 5Financial covenants include maintaining consolidated shareholders' equity above $5B, borrowed monies not exceeding 65% of capital, and an EBITDA to net interest ratio of at least 3:1.
  • 6Facility does not include credit rating-based defaults or material adverse change covenants.
  • 7Proceeds can be used for general corporate purposes, supporting commercial paper, and up to $700M for bonds, letters of credit, and indemnities.

Frequently Asked Questions

This filing announces Carnival Corporation's (CCL) entry into a new, substantial multi-currency credit facility and the concurrent termination of its previous credit agreement. It provides investors with details on the terms, conditions, and financial implications of this new financing arrangement.

The new facility has a term of five years and a slightly lower interest margin (0.175% vs. 0.20% on the previous agreement, though both are margin-based on credit rating). It also replaces multiple prior agreements with a single, larger, and more flexible multi-currency structure. Crucially, it omits credit rating-based default triggers and material adverse change clauses present in some prior agreements.

Carnival must ensure its consolidated issued capital and reserves (shareholders' equity) exceed $5 billion at the end of each fiscal quarter. Additionally, aggregate borrowed monies cannot exceed 65% of consolidated capital, and the ratio of EBITDA to consolidated net interest charges must be at least 3 to 1.

The facility provides a significant and flexible source of funding for general corporate purposes. It enhances liquidity by supporting commercial paper programs and allows for the issuance of bonds and letters of credit up to $700 million, providing the company with greater financial flexibility and stability.