Summary
Royal Caribbean Cruises Ltd. (RCL) announced on July 27, 2017, through an 8-K filing, the entry into material definitive agreements for the financing of three new cruise ships. These agreements provide substantial financing for the fifth Oasis-class ship for Royal Caribbean International (delivery Spring 2021), the third Edge-class ship for Celebrity Cruises (delivery Fall 2021), and the fourth Edge-class ship for Celebrity Cruises (delivery Fall 2022). This proactive financing strategy demonstrates the company's commitment to its fleet expansion and modernization plans. The financing involves unsecured term loans, each guaranteed 100% by Bpifrance Assurance Export (BpiFAE), the official export credit agency of France. The loans are structured with attractive fixed interest rates, 3.18% for US dollar-denominated loans and 1.28% for the Euro-denominated loan, and a maturity of twelve years after the ship's delivery. This secured and competitively priced financing is crucial for managing the significant capital expenditures associated with acquiring new, high-value assets, ensuring that RCL can fund its growth initiatives while maintaining financial flexibility.
Key Highlights
- 1RCL secured financing for three new ships: one Oasis-class and two Edge-class vessels, scheduled for delivery between Spring 2021 and Fall 2022.
- 2The financing consists of unsecured term loans fully guaranteed by Bpifrance Assurance Export (BpiFAE).
- 3US dollar-denominated loans will have a fixed interest rate of 3.18%, while the Euro-denominated loan will have a fixed rate of 1.28%.
- 4The loan facilities will cover up to 80% of the vessel purchase price plus 100% of the premium payable to BpiFAE.
- 5Each loan will amortize semi-annually and mature twelve years after the respective ship's delivery.
- 6The agreements include customary events of default and prepayment clauses, typical for such financing arrangements.