What is the main purpose of these amendments to the export credit facilities?

The primary purpose is to provide Royal Caribbean Cruises Ltd. with extended flexibility regarding its financial covenants. The amendments push back the potential trigger for mandatory prepayments or defaults due to covenant breaches from the current period through the end of 2021, offering financial breathing room during uncertain times.

What are the implications of subsidiaries issuing guarantees?

The issuance of guarantees by certain subsidiaries means they are taking on financial responsibility for the debt under the export credit facilities. This is a condition for obtaining the covenant relief and relates to the financing of new vessels. However, the report notes that these guarantees are intended to be released as debt is repaid or refinanced on an unsecured basis.

Are there any new financial obligations or risks for RCL as a result of these amendments?

While the amendments provide covenant relief, they introduce obligations for certain subsidiaries to issue guarantees. Additionally, restrictions are placed on these guarantor subsidiaries, limiting their ability to issue further guarantees or incur additional debt. These provisions aim to secure the financing for new ships while managing the overall financial structure.

What specific ships are mentioned in relation to these Bpi Facilities?

The Bpi Facilities specifically cover the financing for the third and fourth Edge-class ships for Celebrity Cruises and the fifth and sixth Oasis-Class ships for Royal Caribbean International.

RCL 8-K: Material Agreements & Financial Events

Summary

Royal Caribbean Cruises Ltd. (RCL) filed an 8-K on November 19, 2020, detailing amendments to its export credit facilities. These amendments, agreed upon in Q3 2020, extend the period during which breaches of financial covenants will not trigger mandatory prepayments or defaults through the end of 2021. A key component involves certain subsidiaries issuing guarantees for outstanding debt under these facilities. Specifically, on November 13, 2020, amendments were made to export credit facilities guaranteed by BpiFrance Assurance Export. These Bpi Facilities relate to the financing of newbuild ships, including Edge-class vessels for Celebrity Cruises and Oasis-class ships for Royal Caribbean International. The issuance of these guarantees is contingent upon drawing the debt. Following their issuance, these guarantees can be released under certain conditions. The report also notes restrictions placed on guarantor subsidiaries regarding further guarantees and debt incurrence.

Key Highlights

1Amendments to export credit facilities extend covenant relief through Q4 2021.
2Certain subsidiaries will issue guarantees for debt under export credit facilities.
3Specific amendments relate to BpiFrance Assurance Export-backed facilities for newbuild ships.
4Guarantees are linked to the drawing of debt under the Bpi Facilities.
5Guarantees will be released upon repayment or refinancing of debt on an unsecured basis.
6Restrictions are imposed on guarantor subsidiaries concerning additional guarantees and debt.
7RCL is in the process of extending similar guarantees to other export credit facilities.

ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (Nov 19, 2020)

Summary

Key Highlights

Frequently Asked Questions