RCL Corp. secures $2.2bn term loan

Optional 364-day extension

The company has the option of extending the facility for an additional 364 days.

RCL has borrowed the full amount available under the term loan to further bolster its liquidity.

More than $3.6bn of liquidity

Including this new financing, the company has more than $3.6bn of liquidity comprised of cash deposits and its existing undrawn revolving credit facilities, net of outstanding commercial paper. In addition, RCL has committed financing for all of its new ships on order.

'This is a period of unprecedented disruption for the cruise industry,' EVP/CFO Jason Liberty said. 'We continue to take decisive actions to protect the company's financial and liquidity positions as they enable us to keep focused on our guests, our crew and our long-term plans.'

Joint lead arrangers and book runners

Morgan Stanley, JP Morgan, Bank of America, BNP Paribas and Goldman Sachs acted as joint lead arrangers and book runners on the secured term loan facility. Morgan Stanley is acting as an administrative agent and collateral agent. Perella Weinberg Partners LP served as financial advisor and Skadden Arps, Slate, Meagher & Flom LLP as legal advisor to the company.

Analyst reaction

William Blair lowered projected full-year constant-currency net yield for RCL to down 8%, resulting in earnings per share of $1.54.

Analyst Sharon Zackfia noted the stock is down more than 80% year-to-date on concerns about the industry’s viability in the wake of the coronavirus impact.

'Based on our revised estimates, Royal should have adequate liquidity for 2020,' Zackfia said. 'While we expect consumers will be generally eager to return to normalcy once coronavirus concerns abate, we believe the cruise industry is likely to have a much slower recovery given the amount of negative media coverage around coronavirus outbreaks and ships without ports, and maintain our market perform (hold) rating.'

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