Royal Caribbean Cruises has completed a five-year, $500 million credit facility with an evergreen provision that allows the credit to be increased up to $1 billion. The provision permits more banks to commit to the revolver even though the original credit agreement was signed last month. Bonnie Biumi, acting cfo, explained that the cruise-line company was targeting a facility ranging from $700 million to $1 billion, but accepted the $500 million amount after market and world events slowed lender commitments from rolling in before the targeted first quarter deadline. The provision gives the company flexibility, and banks can come in at anytime, she said.
"We said we'd get it done in the first quarter and we did get it done in the first quarter," Biumi said. "Had I known the war was going to start, I would have timed it a little differently," she added, speaking to the market lull last month after the war in Iraq commenced. She said, however, the combination of amount, pricing and terms was also important and the final agreement met all these points.
Citigroup and Nordea Bank lead the deal, which refinanced a $1 billion Scotia Capital-led revolver priced at LIBOR plus 65 basis points. That credit was set to expire this June. The new undrawn credit is priced at LIBOR plus 13/4%. Biumi mentioned that the pricing is comparable to the previous rate because that agreement was eight years old and market terms today demand the wider spread. Biumi said the selection of Citi and Europe-based Nordea as leads helps represent the cruise line's interests in both the U.S. and Europe. There are presently six banks in the bank group, with Commerce Bank being the only new member, Biumi said. Den Norske Bank is acting as documentation agent for the facility.