8-KMaterial AgreementsFinancial EventsOther Events+1

CARNIVAL CORP 8-K Report, Material Agreement (Jul 20, 2020)

Filed July 20, 2020For Securities:CCL

Summary

Carnival Corporation (CCL) filed an 8-K on July 20, 2020, to report the closing of its private offering of $775 million in aggregate principal amount of 10.500% Second-Priority Senior Secured Notes due 2026 and €425 million in aggregate principal amount of 10.125% Second-Priority Senior Secured Notes due 2026. These notes are secured by a second-priority lien on a significant portion of the company's assets, including shares of subsidiary guarantors, 83 vessels, intellectual property, and other vessel-related assets. The primary purpose of this offering was to bolster the company's liquidity amidst the ongoing impact of the COVID-19 pandemic. The issuance comes with covenants that restrict the company's ability to incur additional debt, make restricted payments, sell assets, and enter into certain other transactions. The filing also highlights the significant risks and uncertainties facing Carnival, particularly the ongoing impact of COVID-19 on its operations, ability to re-commence normal operations, and potential covenant breaches.

Key Highlights

  • 1Carnival Corporation successfully closed a private offering of $775 million and €425 million in aggregate principal amount of Second-Priority Senior Secured Notes due 2026.
  • 2The notes carry significant interest rates of 10.500% for USD notes and 10.125% for Euro notes.
  • 3The issuance is secured by a second-priority lien on a substantial pool of assets, including vessels, intellectual property, and subsidiary stock.
  • 4The offering was made to qualified institutional buyers and non-U.S. investors, exempt from registration under the Securities Act.
  • 5The Indenture includes covenants that limit the company's financial flexibility, such as restrictions on incurring additional debt and making restricted payments.
  • 6The company acknowledges the substantial and ongoing negative impact of the COVID-19 pandemic on its financial condition and operations.
  • 7There is a risk of non-compliance with a maintenance covenant in certain debt facilities by May 31, 2021, if normal operations cannot resume.

Frequently Asked Questions

The notes were issued to raise capital and bolster the company's liquidity, which has been significantly impacted by the COVID-19 pandemic and the resulting pause in guest cruise operations.

The notes are secured by a second-priority lien on various assets, including shares of subsidiary guarantors, 83 vessels, intellectual property, and other assets associated with the vessels.

The indenture contains covenants that limit Carnival's ability to incur additional indebtedness, make dividend payments and other restricted payments, sell assets, create liens, and engage in certain affiliate transactions.

The filing emphasizes the significant risks and uncertainties due to the COVID-19 pandemic. While the note issuance provides some liquidity, the company faces ongoing challenges in resuming normal operations and potential covenant breaches if operations do not normalize.