Royal Caribbean Group has signed up for hundreds of millions of dollars in financing, adding to a total that is already in the billions.
The Richard Fain-led owner of 59 cruiseships has secured a binding commitment from Morgan Stanley for a $700m term loan facility for "general corporate purposes", if needed.
"We have mentioned in the past that we would like to raise more money to be in a more comfortable position to withstand the pause in operations," spokesman Jonathon Fishman told TradeWinds.
"It’s always good to have some 'liquidity cushion' as the situation remains fluid.
"We are really focused on not only just getting on to the other side of this crater, but also making sure that we gain our financial health, so we continue to also look internally at reducing costs and capital expenditures, too."
Loan is good for a year
The New York-listed company may draw on it at any time before 12 August 2021.
Once drawn, the loan will bear interest at Libor plus 3.75% and will mature 364 days from funding, Royal Caribbean said.
The facility will be guaranteed by RCI Holdings, a wholly-owned Royal Caribbean subsidiary that has a stake in the registered owner's seven vessels in its flagship Royal Caribbean International fleet.
The company would not disclose the names of the vessels backing the latest loan.
Royal Caribbean may increase the facility's borrowing limit to $1bn from time to time, as long as it offers assets that can back the increase.
Royal Caribbean, which posted a $1.44bn loss for the second quarter, has already taken on billions of dollars in debt that includes issuing $2.15bn in notes.
Long-term debt held by Royal Caribbean, which saw its shares dip $1.9% in the first hour of Wednesday's trading on Wall Street, stands at $17.7bn.
Billions already secured
Royal Caribbean also holds another $11.3bn in credit facilities to pay for deliveries scheduled by 2025.
Perella Weinberg Partners served as financial advisor and Skadden, Arps, Slate, Meagher & Flom acted as legal advisor to the company for the new facility.
Royal Caribbean estimates its cash burn to range from $250m to $290m per month during a lay-up of its entire fleet since March.
Liquidity as of 30 June stood at about $4.1bn in cash and cash equivalents amid debt maturities of $300m for the rest of 2020 and $1.3bn for next year.
The company expects to spend $600m by December and $1.8bn in 2021 on newbuildings.
It plans to receive only three out of five newbuildings by 2021 as planned — two being the 596-berth Silver Moon and Silver Dawn.
TradeWinds has identified one of the two delayed newbuildings as 6,360-berth Wonder of the Seas — its biggest ship yet, originally set for delivery next spring.
The delivery was pushed back by coronavirus-related delays at France's Chantiers de l'Atlantique, according to an announcement on its website.
