8-KMaterial AgreementsFinancial EventsExhibits & Filings

ROYAL CARIBBEAN CRUISES LTD 8-K Report, Material Agreement (Feb 18, 2021)

Filed February 18, 2021For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) has filed an 8-K report detailing significant amendments to its credit facilities. These amendments primarily focus on extending the waiver of critical financial covenants, specifically the fixed charge coverage and net debt to capitalization ratios, through the third quarter of 2022. This extension provides the company with continued flexibility during a challenging operating environment. Additionally, the terms for testing these covenants have been modified for the period following the waiver, and the minimum liquidity requirement has been increased to $500 million during the waiver period. The company also amended its export credit-backed facilities related to its Icon-class ships, including those guaranteed by Finnvera. These amendments formalize the issuance of previously agreed-upon guarantees and complete the company's obligations under its Financial Covenant Extension Amendments. These actions collectively demonstrate RCL's efforts to manage its debt obligations and maintain financial stability while navigating the ongoing impact of the pandemic on the cruise industry.

Key Highlights

  • 1Amendments extend waiver of fixed charge coverage and net debt to capitalization covenants through Q3 2022.
  • 2Modified covenant calculation methods and levels for post-waiver period through end of 2023.
  • 3Increased minimum liquidity covenant to $500 million during the waiver period.
  • 4Restrictions on cash dividends and share repurchases extended through Q3 2022.
  • 5Amended export credit-backed facilities for Icon-class ships, including Finnvera guarantees.
  • 6Formalized issuance of subsidiary guarantees for export credit facilities, satisfying prior obligations.
  • 7Completed all Financial Covenant Extension Amendments as previously disclosed.

Frequently Asked Questions

The primary purpose of these amendments is to provide Royal Caribbean Cruises Ltd. with continued financial flexibility by extending the waiver of key financial covenants (fixed charge coverage and net debt to capitalization) through the third quarter of 2022. This allows the company to manage its debt obligations without immediate pressure to meet these specific metrics, which is crucial given the ongoing impact of the pandemic on the cruise industry.

The amendments increase the minimum liquidity covenant to $500 million for the duration of the waiver period. This higher liquidity floor ensures the company maintains a substantial cash cushion, although it can be reduced to $350 million if the company raises at least $500 million in additional capital.

Yes, the amendments extend the restrictions on paying cash dividends and executing share repurchase programs through the third quarter of 2022, aligning these limitations with the extended waiver period for financial covenants.

These amendments relate to the export credit-backed facilities used to finance the construction of the company's Icon-class ships. They formalize the issuance of previously agreed-upon subsidiary guarantees, satisfying the company's obligations under earlier financial covenant extension amendments. This secures financing for these new vessels and completes the process of addressing covenant extensions for these facilities.