8-KMaterial AgreementsFinancial EventsExhibits & Filings

ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (May 4, 2020)

Filed May 4, 2020For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) announced on May 4, 2020, that it has entered into material definitive agreements to amend existing export-credit backed loan facilities. These amendments, effective in late April 2020, incorporate a 12-month debt holiday initiative provided by BpiFrance Assurance Export (BpiFAE), France's official export credit agency. This initiative is designed to offer interim relief on debt service and financial covenants to cruise lines during the ongoing global health crisis. The amendments allow RCL to defer principal amortization payments for specific vessels (Celebrity Edge, Celebrity Apex, and Symphony of the Seas) for a period of 12 months, from April 1, 2020, to March 31, 2021. The deferred principal will be repaid in installments starting from April 2021 through October 2024 or March 2025, depending on the vessel. Importantly, these amendments will generate approximately $220 million in incremental liquidity through April 2021, providing crucial financial flexibility during a challenging period for the industry. The agreement also offers relief from mandatory prepayments triggered by breaches of financial covenants during this deferral period.

Key Highlights

  • 1RCL amended export-credit backed loan facilities for Celebrity Edge, Celebrity Apex, and Symphony of the Seas.
  • 2Amendments incorporate a 12-month debt holiday initiative from BpiFAE, France's export credit agency.
  • 3This initiative provides relief on debt service and financial covenants during the global health crisis.
  • 4Principal amortization payments due between April 1, 2020, and March 31, 2021, are deferred.
  • 5Deferred principal payments will be repaid in semi-annual installments from April 2021 through October 2024/March 2025.
  • 6The amendments are expected to generate approximately $220 million in incremental liquidity through April 2021.
  • 7Breaches of financial covenants during the deferral period will not trigger mandatory prepayments.

Frequently Asked Questions

The main purpose of these amendments is to provide Royal Caribbean Cruises Ltd. with financial relief by deferring principal loan payments for a period of 12 months (April 1, 2020 - March 31, 2021) through a debt holiday initiative offered by BpiFAE, France's export credit agency. This aims to improve liquidity and ease financial covenant pressures during the global health crisis.

Across the three affected loan facilities, these amendments are expected to generate approximately $220 million in incremental liquidity through April 2021.

The deferred principal amounts will be repaid in eight equal semi-annual installments. For the Celebrity Edge facility, repayment will be between April 2021 and October 2024. For the Celebrity Apex and Symphony of the Seas facilities, repayment will be between September 2021 and March 2025.

Yes, the company is restricted from taking certain actions, such as paying dividends, repurchasing stock, or issuing new debt or equity (unless for liquidity purposes), while the deferred principal is outstanding. These restrictions have customary carve-outs, such as for debt incurred to finance new ships.