Summary
Royal Caribbean Cruises Ltd. (RCL) filed an 8-K on December 7, 2017, primarily to disclose the amendment and restatement of its $1.4 billion unsecured revolving credit facility, effective December 4, 2017. This amendment reflects improvements in the company's credit metrics and updates existing financial covenants, including maintaining a fixed charge coverage ratio and limiting the net debt-to-capital ratio. The updated facility continues to have interest based on LIBOR plus a margin, now set at 1.175%.
Key Highlights
- 1Amendment and restatement of the existing $1.4 billion unsecured revolving credit facility.
- 2The amended facility's interest rate is LIBOR plus a margin of 1.175%.
- 3The amendment reflects improved credit metrics of Royal Caribbean Cruises Ltd.
- 4Key financial covenants, including fixed charge coverage ratio and net debt-to-capital ratio, remain in place but have been updated.
- 5The disclosure under Item 2.03 (Creation of a Direct Financial Obligation) is incorporated from Item 1.01.
- 6The amendment agreement is filed as an exhibit to the 8-K.
Frequently Asked Questions
The main purpose of this 8-K filing is to report the amendment and restatement of Royal Caribbean Cruises Ltd.'s $1.4 billion unsecured revolving credit facility.
The amended facility has updated terms and covenants to reflect the company's improved credit metrics. The interest rate is now set at LIBOR plus a margin of 1.175%. While specific details of the updates aren't fully elaborated in the filing, the core financial covenants related to fixed charge coverage and net debt-to-capital ratios are maintained but updated.
No, the filing indicates the opposite. The amendment to the revolving credit facility, which allows the company to borrow funds, reflects an improvement in the company's credit metrics. This suggests a stronger financial position rather than distress. It is an amendment to an existing facility, not the creation of a new, substantial debt obligation outside of their normal operating credit.
The agreement is among Royal Caribbean Cruises Ltd., various financial institutions that are or shall become parties to the agreement, and The Bank of Nova Scotia, acting as the administrative agent for the lender parties.