8-KMaterial AgreementsFinancial EventsOther Events+1

CARNIVAL CORP 8-K Report, Material Agreement (Aug 18, 2020)

Filed August 18, 2020For Securities:CCL

Summary

Carnival Corporation (CCL) filed an 8-K on August 18, 2020, announcing the closing of a private offering for $900 million in aggregate principal amount of 9.875% Second-Priority Senior Secured Notes due 2027. These notes are secured by a second-priority lien on a significant portion of the company's assets, including vessels, intellectual property, and other related operational assets. The offering was conducted through a private placement to qualified institutional buyers and non-U.S. investors, exempt from SEC registration. This financing is a critical step for Carnival as it navigates the unprecedented challenges posed by the COVID-19 pandemic, which had led to a pause in its operations. The proceeds from these notes are intended to bolster the company's liquidity and financial flexibility during this challenging period. The Indenture governing these notes includes covenants that restrict the company's ability to incur additional debt, make restricted payments, sell assets, and other actions, while also outlining conditions for mandatory repurchase upon a change of control.

Key Highlights

  • 1Carnival Corporation closed a private offering of $900 million in 9.875% Second-Priority Senior Secured Notes due 2027.
  • 2The notes are secured by a second-priority lien on key company assets, including 80 vessels, material intellectual property, and other operational assets.
  • 3The offering was conducted as a private placement, exempt from registration under the Securities Act.
  • 4The Indenture includes covenants that limit the company's ability to incur additional debt, make restricted payments, sell assets, and other actions.
  • 5A change of control event will trigger an offer to repurchase the notes at 101% of the principal amount.
  • 6The financing is aimed at enhancing Carnival's liquidity and financial flexibility amidst the operational impact of the COVID-19 pandemic.
  • 7The company acknowledges the significant and ongoing impact of COVID-19 on its financial condition, operations, and ability to obtain financing.

Frequently Asked Questions

The primary purpose of this debt offering is to enhance Carnival Corporation's liquidity and financial flexibility during the significant operational and financial challenges posed by the COVID-19 pandemic, which had caused a pause in guest cruise operations.

The notes are secured by a second-priority security interest in a collateral pool that includes shares of subsidiary guarantors, 80 vessels, material intellectual property, and other related operational assets such as inventory, trade receivables, and casino equipment associated with the mortgaged vessels.

Yes, the Indenture contains covenants that limit Carnival Corporation, Carnival plc, and their restricted subsidiaries from, among other things, incurring additional indebtedness, making restricted payments (like dividends), selling assets, creating liens, consolidating or selling substantially all assets, and entering into affiliate transactions. These covenants have exceptions and limitations.

In the event of specified change of control triggering events, Carnival Corporation is obligated to offer to repurchase the Secured Notes at 101% of their principal amount, plus any accrued and unpaid interest.