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CARNIVAL CORP 8-K Report, Material Agreement (Jul 20, 2021)

Filed July 20, 2021For Securities:CCL

Summary

Carnival Corporation (CCL) announced significant progress in its efforts to manage its debt obligations through a cash tender offer and consent solicitation related to its 11.500% First Priority Senior Secured Notes due 2023. The company reported that over $2.4 billion in principal amount of these notes were tendered ahead of the early deadline, exceeding the maximum purchase amount of $2,004 million. This indicates strong participation from noteholders and necessitates a pro-rata acceptance of tenders, meaning not all tendered notes will be repurchased. Furthermore, Carnival successfully solicited consents to amend certain provisions of the indenture governing these notes. Approximately 85.19% of the required consents were received, allowing the company to execute a second supplemental indenture. This amendment aims to align the indenture's terms with existing loan agreements and other note indentures, simplifying and standardizing covenants. The Supplemental Indenture's effectiveness is contingent on the company accepting the consents and satisfying certain financing conditions, suggesting a strategic move to streamline its financial structure as it navigates the post-pandemic recovery.

Key Highlights

  • 1Carnival's cash tender offer for 11.500% First Priority Senior Secured Notes due 2023 received over $2.4 billion in tenders, exceeding the $2,004 million maximum purchase amount.
  • 2Due to oversubscription, tendered notes will be accepted on a pro-rata basis, meaning not all tendered notes will be repurchased.
  • 3The company received the necessary consents (85.19%) to amend key provisions in the indenture governing these notes.
  • 4A second supplemental indenture was executed to align the note indenture with existing loan agreements and other note indentures.
  • 5The amendments aim to synchronize financial covenants and simplify the company's debt structure.
  • 6The effectiveness of the Supplemental Indenture is subject to the acceptance of consents and the satisfaction of a financing condition.

Frequently Asked Questions

The purpose is to proactively manage Carnival's debt by repurchasing a portion of its 11.500% First Priority Senior Secured Notes due 2023 and to amend certain terms of the governing indenture. These actions are intended to streamline financial covenants and align them with existing debt agreements, potentially improving financial flexibility.

No. The tender offer was oversubscribed, meaning more notes were tendered than the company intended to purchase ($2,004 million). Therefore, tendered notes will be accepted for repurchase on a pro-rata basis, based on the total amount tendered.

The Supplemental Indenture allows Carnival to modify specific terms of the notes' indenture to be more consistent with its Term Loan Agreement and other outstanding debt. This standardization of covenants can simplify compliance and reporting for the company.

The proposed amendments will become operative only after Carnival accepts the solicited consents, makes arrangements for the consent payment, and certain conditions related to a financing transaction are met or waived by the company.