8-KMaterial AgreementsFinancial EventsOther Events+1

CARNIVAL CORP 8-K Report, Material Agreement (Nov 2, 2021)

Filed November 2, 2021For Securities:CCL

Summary

Carnival Corporation (CCL) announced on November 2, 2021, the closing of a private offering of $2 billion in 6.000% Senior Unsecured Notes due 2029. The net proceeds from this offering are earmarked for scheduled debt principal payments in fiscal year 2022 and general corporate purposes, which may include further debt repayment, financing for property, plant, and equipment, and vessel-related costs. This issuance signifies a move to bolster liquidity and manage upcoming debt obligations amidst ongoing industry challenges. The notes are jointly and severally guaranteed by Carnival plc and certain subsidiaries. A significant feature of the indenture is a provision where many restrictive covenants will be permanently lifted if the notes achieve investment grade ratings from at least two major credit rating agencies and no event of default is continuing. Conversely, a change of control event would trigger an offer to repurchase the notes at 101% of the principal amount.

Key Highlights

  • 1Carnival Corporation successfully closed a $2 billion offering of 6.000% Senior Unsecured Notes due 2029.
  • 2Proceeds will be used for fiscal 2022 debt principal payments and general corporate purposes, including potential debt repayment and capital expenditures.
  • 3The notes are unsecured and mature on May 1, 2029, with semi-annual interest payments starting May 1, 2022.
  • 4Carnival plc and certain subsidiaries provide full and unconditional guarantees for the notes.
  • 5Restrictive covenants in the indenture may be permanently removed if the notes achieve investment grade ratings from at least two of S&P, Moody's, or Fitch.
  • 6A change of control event will require Carnival to offer to repurchase the notes at 101% of their principal amount plus accrued interest.
  • 7The offering was conducted through private placements to qualified institutional buyers and non-U.S. investors, not registered under the Securities Act.

Frequently Asked Questions

The primary purposes of the $2 billion Senior Unsecured Notes offering are to make scheduled principal payments on debt during fiscal year 2022 and for general corporate purposes. This can include repaying other indebtedness, financing or refinancing costs related to property, plant, and equipment (including vessels), and covering vessel-related expenses.

The notes carry a 6.000% interest rate, payable semi-annually on May 1 and November 1, beginning May 1, 2022. They mature on May 1, 2029. The notes are unsecured and are guaranteed by Carnival plc and certain subsidiaries.

A significant covenant in the indenture will be permanently removed if the Senior Unsecured Notes achieve investment grade ratings from at least two of the three major credit rating agencies (Standard & Poor’s, Moody’s, and Fitch), provided no event of default is ongoing. This could provide more financial flexibility for the company.

As unsecured debt, the notes are subordinate to secured debt. Investors should also consider the general risks outlined in Carnival's cautionary note, including the ongoing impact of COVID-19 on operations, global travel demand, potential for world events, regulatory changes, cybersecurity threats, fuel price fluctuations, currency exchange rates, competition, and the company's ability to manage its shipbuilding programs and ship repairs. Additionally, the covenants place restrictions on the company's ability to incur more debt, pay dividends, make investments, or sell assets, though these can be lifted under specific conditions.