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

The primary purpose is to extend the waiver period for financial covenant breaches, providing RCL with additional flexibility. Previously extended in Q3 2020, this relief now extends through the fourth quarter of 2021, meaning covenant breaches won't automatically trigger defaults or mandatory prepayments until then.

What are the new guarantees mentioned in the filing?

Certain subsidiaries of RCL are issuing guarantees for specific export credit facilities. These guarantees are being put in place to satisfy obligations stemming from the earlier amendments that extended the financial covenant relief. The guarantees are associated with debt financing for several key vessels.

What restrictions are imposed on the subsidiaries issuing these guarantees?

Subsidiaries issuing these guarantees, and intermediary parent companies, face restrictions. Guarantor subsidiaries cannot issue additional guarantees to lenders outside of these specific export credit facilities. Some of these subsidiaries are also restricted from incurring additional debt. These measures aim to safeguard the lenders of the guaranteed facilities.

Does this filing impact RCL's existing debt obligations?

This filing details the implementation of financial arrangements, specifically subsidiary guarantees, that were agreed upon as part of previously disclosed amendments to extend financial covenant relief. While it introduces new guarantee obligations for certain subsidiaries, it is part of a strategy to manage existing debt and maintain operational flexibility during a challenging period, rather than creating entirely new debt.

RCL 8-K: Material Agreements & Financial Events

Summary

Royal Caribbean Cruises Ltd. (RCL) filed an 8-K on December 22, 2020, to disclose amendments to its export credit facilities and related guarantees. These amendments are part of a broader strategy initiated in Q3 2020 to extend the period during which breaches of financial covenants will not trigger mandatory prepayments or defaults, now through the end of Q4 2021. This filing specifically details amendments to facilities guaranteed by Euler Hermes Aktiengesellschaft ("Hermes Facilities"), involving guarantees from certain subsidiaries for debt used to finance specific vessels across its Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands.

Key Highlights

1RCL has amended export credit facilities to extend covenant breach relief through Q4 2021.
2Subsidiaries are issuing guarantees for certain export credit facilities as part of these amendments.
3Guarantees are specifically for debt financing vessels like Odyssey of the Seas, Anthem of the Seas, Ovation of the Seas, Quantum of the Seas, Spectrum of the Seas (Royal Caribbean International); Celebrity Equinox, Celebrity Eclipse, Celebrity Solstice, Celebrity Reflection, Celebrity Silhouette (Celebrity Cruises); and the first two Evolution-class vessels (Silversea Cruises).
4These guarantees are to be issued upon debt drawdowns for Odyssey of the Seas and the Evolution-class vessels.
5Guarantees will be released under certain circumstances as debt is repaid or refinanced on an unsecured basis.
6Guarantor subsidiaries face restrictions on issuing additional guarantees or incurring further debt, with similar restrictions for intermediary parent companies providing guarantees for new vessels.
7RCL is in the process of amending other export credit facilities to implement similar guarantees.

ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (Dec 22, 2020)

Summary

Key Highlights

Frequently Asked Questions