Summary
On March 23, 2020, Royal Caribbean Cruises Ltd. (RCL) filed an 8-K report announcing the execution of a $2.2 billion senior secured term loan. This significant financing was secured on March 22, 2020, and matures in 364 days, with an option to extend for an additional year subject to a 1.00% extension fee. The proceeds are earmarked for working capital and general corporate purposes, providing the company with crucial liquidity amidst an uncertain operating environment. The loan is backed by a pledge of trademarks and equity interests in vessel-owning subsidiaries, with an effort to secure mortgages on these vessels. The loan agreement includes standard covenants, a key financial covenant requiring a collateral coverage ratio of at least 2.50:1.00, and restrictions on subsidiary debt, liens, asset sales, investments, and restricted payments, among others. Notably, entities affiliated with directors Eyal Ofer and Arne Alexander Wilhelmsen participated in the loan with $100 million each. This financing demonstrates the company's proactive steps to ensure financial flexibility during a period of significant industry disruption.
Key Highlights
- 1Secured a $2.2 billion senior secured term loan on March 23, 2020.
- 2The loan has an initial maturity of 364 days, with an option to extend for another 364 days.
- 3Proceeds will be used for working capital and general corporate purposes.
- 4The loan is secured by trademarks and pledges of equity interests in vessel-owning subsidiaries, with efforts to add vessel mortgages.
- 5A financial covenant requires maintaining a collateral coverage ratio of at least 2.50:1.00.
- 6Affiliates of directors Eyal Ofer and Arne Alexander Wilhelmsen participated in the loan ($100 million each).