8-KMaterial AgreementsFinancial EventsExhibits & Filings

ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (Aug 26, 2013)

Filed August 26, 2013For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) announced a significant amendment and restatement of its unsecured revolving credit facility on August 26, 2013. The key change is an increase in the facility's total amount from $525 million to $850 million, with the termination date extended to August 23, 2018. This bolstered facility, along with an existing $1.1 billion facility, brings RCL's total revolving credit capacity to $2.0 billion, providing substantial financial flexibility. The amendment also includes provisions for a potential further increase of up to $300 million in the facility's capacity, subject to lender commitments. While interest rates and fees are detailed (LIBOR plus 1.75% margin and a 0.37% facility fee), the core financial covenants remain largely consistent, requiring the maintenance of minimum net worth, a fixed charge coverage ratio, and limits on the net debt-to-capital ratio. This move indicates RCL's proactive management of its liquidity and financing structure.

Key Highlights

  • 1RCL amended and restated its unsecured revolving credit facility, increasing its size to $850 million from $525 million.
  • 2The facility's termination date has been extended to August 23, 2018.
  • 3Total revolving credit capacity for RCL now stands at $2.0 billion, combining the amended facility with an existing $1.1 billion facility.
  • 4The company retains the option to further increase the facility's capacity by an additional $300 million.
  • 5Interest on advances under the amended facility is set at LIBOR plus a 1.75% margin.
  • 6A facility fee of 0.37% per annum on total commitments is applicable.
  • 7Key financial covenants, including minimum net worth, fixed charge coverage ratio, and net debt-to-capital ratio limits, remain substantially similar to the previous agreement.

Frequently Asked Questions

The primary impact for investors is the significant increase in RCL's available liquidity. The company has boosted its revolving credit facility by $325 million and extended its maturity, increasing its total revolving credit capacity to $2.0 billion. This enhanced financial flexibility provides a cushion for operations, potential investments, or to navigate economic uncertainties.

The amendment itself does not immediately increase RCL's outstanding debt, but it expands its borrowing capacity. The company retains the ability to borrow up to $850 million under this facility (and $1.1 billion under its other facility), subject to its financial covenants. The filing notes that the financial covenants, such as limits on the net debt-to-capital ratio, remain in place, indicating that any future borrowing will need to adhere to these restrictions.

Under the amended facility, advances will bear interest at a rate of LIBOR plus a margin of 1.75%. Additionally, RCL is subject to an annual facility fee of 0.37% on the total commitments under the facility.

The filing states that the conditions, covenants, representations, warranties, and events of default are substantially similar to those in the prior agreement. While the specific details are extensive, the core financial covenants requiring minimum net worth, a fixed charge coverage ratio, and limits on the net debt-to-capital ratio have been maintained.