Royal Caribbean Cruises has secured a $2.2 billion 364-day secured-term loan facility as the company battles the fallout from the coronavirus pandemic.
The move is designed to improve the liquidity position of the cruise line, with Royal Caribbean having immediately borrowed the full amount.
It comes as cruise lines, and the entire hospitality industry, face tremendous challenges due to the worldwide spread of Covid-19.
Royal Caribbean has currently suspended all of its sailings until at least early April.
Including this new financing, the company now has over $3.6 billion of liquidity, comprised of cash deposits and its existing undrawn revolving credit facilities (net of outstanding commercial paper).
In addition, the company has committed financing for all of its new ships on order.
“This is a period of unprecedented disruption for the cruise industry,” said Jason Liberty, executive vice president and chief financial officer at Royal Caribbean.
“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.”
Morgan Stanley, JP Morgan, Bank of America, BNP Paribas and Goldman Sachs acted as joint lead arrangers and bookrunners on the secured term loan facility.
Royal Caribbean Cruises is the parent company of Royal Caribbean International, and operates sister brands Celebrity Cruises, Azamara and Silversea Cruises.
The new financing comes as a bailout for the cruise industry causes concerns in the United States.
Earlier, Richard Blumenthal, Edward Markey, Sheldon Whitehouse and five other Democratic senators published a letter arguing the industry should only receive financial aid if it is forced to clean up environmental practices.
“Requiring reductions in carbon pollution from foreign-flagged cruise ships, as well as reductions in other air pollutants and increased penalties for illegal dumping, would result in cleaner air and a healthier ocean,” the senators argued.
“Business leaders are themselves increasingly recognising that their companies must make positive contributions to society or risk losing their social license.”
In a second letter, environmental groups, including Greenpeace and Friends of the Earth, argued for similar concessions.
“Providing United States taxpayer dollars to massive foreign cruise ship corporations that pollute our environment, take advantage of tax loopholes and flag ships in foreign countries would allow the cruise industry to return to business as usual, which is unacceptable.
“This polluting and destructive foreign industry does not deserve a bailout from American taxpayers, especially not in the middle of a national health emergency.”
Their letter further outlined that in the event government assistance is given, it should come with “explicit, non-negotiable environmental and tax liability conditions”.
The United States congress is currently debating what could become a $1.3 trillion bailout for the economy as the country battles the financial impact of the coronavirus shutdown.
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