8-KMaterial AgreementsExhibits & Filings

ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (Mar 19, 2010)

Filed March 19, 2010For Securities:RCL

Summary

This 8-K filing from Royal Caribbean Cruises Ltd. (RCL) on March 19, 2010, announces a significant financing agreement. The company, through its wholly-owned subsidiary Allure of the Seas Inc., has entered into a credit agreement for an unsecured term loan facility of up to $1.13 billion. This loan is primarily intended to finance the purchase price of the cruise ship 'Allure of the Seas'. Notably, the loan is 95% guaranteed by Finnvera, Finland's export credit agency, mitigating a substantial portion of the credit risk. The loan features a 12-year amortization schedule with semi-annual payments and a seven-year repayment option for participating financial institutions. This move provides crucial funding for a major capital expenditure, underscoring the company's strategic investment in its fleet expansion.

Key Highlights

  • 1RCL subsidiary Allure of the Seas Inc. secured a credit agreement for up to $1.13 billion.
  • 2The unsecured term loan is designated for the purchase of the cruise ship 'Allure of the Seas'.
  • 3Finnvera, Finland's export credit agency, provides a 95% guarantee on the loan, significantly de-risking the facility.
  • 4The loan has a 12-year amortization period with semi-annual principal payments.
  • 5Financial institutions participating in the loan have an option to elect repayment on the seventh anniversary.
  • 6The borrower, Allure of the Seas Inc., has the flexibility to make voluntary prepayments of the principal.
  • 7This financing supports a major capital investment in the company's fleet expansion.

Frequently Asked Questions

The credit agreement is for an unsecured term loan of up to $1.13 billion, which will be used by RCL's subsidiary, Allure of the Seas Inc., to finance the purchase price of the cruise ship 'Allure of the Seas'.

Finnvera, the official export credit agency of Finland, provides a 95% guarantee on the loan. This significantly reduces the credit risk for the lending financial institutions and likely helped Royal Caribbean secure favorable loan terms.

The loan amortizes over 12 years with semi-annual payments. Additionally, each participating financial institution has the option to elect repayment of its portion of the loan on the seventh anniversary of the agreement. The borrower also has the flexibility to make voluntary prepayments.

Yes, this credit agreement represents a new debt financing for the company, specifically to fund the acquisition of a new vessel. However, the substantial guarantee from Finnvera likely mitigates some of the financial risk associated with this debt.