8-KMaterial AgreementsFinancial EventsExhibits & Filings

ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (Jun 28, 2016)

Filed June 28, 2016For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) announced on June 28, 2016, the entry into material definitive agreements for the financing of two new Edge-class ships for its Celebrity Cruises brand. These vessels are slated for delivery in the fall of 2018 and the first half of 2020, respectively. The financing is structured as U.S. dollar-denominated term loans, with each loan guaranteed 100% by COFACE, the official export credit agency of France. These agreements provide significant financial flexibility for RCL, covering up to 80% of the vessel purchase price plus associated COFACE premiums. The loans will amortize semi-annually and mature twelve years after delivery, carrying a fixed interest rate of 3.225%. This move signals RCL's commitment to fleet expansion and modernization, providing clarity on the funding for these major capital expenditures.

Key Highlights

  • 1RCL entered into credit agreements to finance two new Edge-class ships for Celebrity Cruises, with delivery expected in Fall 2018 and H1 2020.
  • 2The financing for each ship is structured as a U.S. dollar-denominated term loan.
  • 3Each loan is 100% guaranteed by Compagnie Française D’Assurance pour le Commerce Extérieur (COFACE), the French export credit agency.
  • 4The maximum loan amount for each facility covers 80% of the vessel purchase price plus 100% of the COFACE premium.
  • 5Loans will amortize semi-annually and mature twelve years after delivery.
  • 6A fixed interest rate of 3.225% (inclusive of margin) has been secured for these loans.
  • 7The credit agreements include customary default and prepayment provisions.

Frequently Asked Questions

This 8-K filing announces that Royal Caribbean Cruises Ltd. (RCL) has entered into material definitive agreements for financing two new Edge-class ships for its Celebrity Cruises brand, with deliveries scheduled for late 2018 and early 2020.

Each ship's financing is a U.S. dollar-denominated term loan, guaranteed 100% by the French export credit agency (COFACE). The loans will cover up to 80% of the vessel purchase price plus COFACE premiums, will amortize semi-annually, mature 12 years after delivery, and carry a fixed interest rate of 3.225%.

This filing confirms a significant financial obligation for RCL as it secures the funding for two major capital assets. The terms provide a clear, fixed interest rate and a long amortization period, which can help in financial planning and managing future debt service.

The credit agreements contain standard clauses for events of default and prepayment. These typically include conditions like non-payment, breach of covenants, default on other indebtedness, significant judgments against the company, or a change of control, which are common in large corporate financing agreements.