8-KMaterial AgreementsFinancial EventsExhibits & Filings

CARNIVAL CORP 8-K Report, Material Agreement (Jan 6, 2021)

Filed January 6, 2021For Securities:CCL

Summary

Carnival Corporation (CCL) filed an 8-K on January 6, 2021, reporting an amendment to its multicurrency revolving credit agreement. The key change involves an amendment to the debt-to-capitalization ratio, expanding the permissible limit from November 30, 2021, through February 28, 2024. This amendment provides increased financial flexibility during a critical period for the company. Furthermore, the agreement introduces new financial covenants, including minimum liquidity requirements from February 28, 2021, to November 30, 2022, and a minimum interest coverage covenant starting February 28, 2023. These covenants aim to ensure the company maintains sufficient liquidity and the ability to cover its interest obligations. The amendment also imposes restrictions on the granting of guarantees and the incurrence of security interests on certain vessels until November 30, 2024, and introduces negative covenants on indebtedness, liens, investments, and restricted payments, consistent with existing senior unsecured notes.

Key Highlights

  • 1Amendment to multicurrency revolving credit agreement executed on December 31, 2020.
  • 2Expansion of the debt-to-capitalization ratio limit from November 30, 2021, to February 28, 2024, providing increased financial flexibility.
  • 3Introduction of a minimum liquidity covenant effective from February 28, 2021, to November 30, 2022.
  • 4Inclusion of a minimum interest coverage covenant starting from February 28, 2023, for the remainder of the facility's term.
  • 5Restrictions on granting new guarantees and security interests on vessels until November 30, 2024.
  • 6Adherence to negative covenants and restrictions on indebtedness, liens, investments, and restricted payments until November 30, 2024.

Frequently Asked Questions

The amendment expands the permissible debt-to-capitalization ratio from late 2021 through early 2024. This provides Carnival with greater flexibility in its capital structure during a period that was expected to be challenging for the cruise industry.

The amendment introduces two new financial covenants: a minimum liquidity covenant (effective Feb 28, 2021 - Nov 30, 2022) and a minimum interest coverage covenant (effective Feb 28, 2023, onwards). These covenants are designed to ensure the company maintains adequate cash reserves and can service its interest expenses.

Yes, the amendment restricts the granting of new guarantees and security interests on certain vessels until November 30, 2024. It also imposes limitations on indebtedness, liens, investments, and restricted payments (which can include dividends) until the same date, subject to certain exceptions.

Most of the new restrictions and covenants introduced by the amendment are in place until November 30, 2024. The debt-to-capitalization ratio expansion is specifically until February 28, 2024.