Royal Caribbean Cruise Lines 2013 Annual Report Download - page 61
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PART II
As of December 31, 2013, we have approximately
$8.1 billion in long-term debt obligations. During 2012
and 2013 we entered into a series of transactions to
refinance our 2013 and 2014 bond maturities, reduce
interest costs, improve financing terms and extend
maturities. During 2013, we entered into a credit
agreement, which provides an unsecured term loan
facility in an amount up to $380.0 million due August
2018. We amended and restated our $525.0 million
unsecured revolving credit facility to $850.0 million,
reduced the pricing and extended the termination
date to August 2018. In addition, we increased the
capacity of our revolving credit facility due July 2016
by $20.0 million, bringing our total capacity under
this facility to $1.1 billion. As of December 31, 2013, we
have an aggregate revolving borrowing capacity of
$2.0 billion. Refer to Note 7. Long-Term Debt to our
consolidated financial statements under Item 8.
Financial Statements and Supplementary Data for
further information.
As of December 31, 2013, we had liquidity of $1.9 bil-
lion, consisting of approximately $204.7 million in
cash and cash equivalents and $1.7 billion available
under our unsecured credit facilities. We anticipate
that our cash flows from operations and our current
financing arrangements, as described above, will be
adequate to meet our capital expenditures and debt
repayments over the next twelve-month period. In
January 2014, we repaid our €745.0 million 5.625%
unsecured senior notes with proceeds from our
$380.0 million unsecured term loan facility and our
revolving credit facilities.
In 2013, we repurchased $21.0 million of our 11.875%
unsecured senior notes due 2015. Total consideration
paid in connection with these repurchases, including
premium and related fees and expenses, was $24.9
million resulting in a loss on the early extinguishment
of debt of approximately $4.2 million which was
immediately recognized in earnings. We may from
time to time repurchase our debt in the open market,
through debt tender offers, exchanges of debt secu-
rities, by exercising redemption rights or in privately
negotiated transactions. We may also refinance exist-
ing debt or exchange existing debt for newly issued
debt obligations.
As of December 31, 2013, we have on order three
Quantum-class ships and one Oasis-class ship each
of which has committed unsecured bank financing
arrangements which include sovereign financing
guarantees. Refer to Note 15. Commitments and
Contingencies to our consolidated financial state-
ments under Item 8. Financial Statements and
Supplementary Data for further information.
We are in the process of implementing a broad profit-
ability improvement program aimed at increasing rev-
enues and reducing expenses with a goal of further
improving our returns on invested capital. There are
numerous initiatives in connection with this program
that are at different stages of implementation. One of
those initiatives relates to realizing economies of scale
and improving service delivery to our travel partners
and guests by restructuring and consolidating our
global sales, marketing and general and administrative
structure. During the third quarter of 2013, we moved
forward with activities related to this initiative. A sec-
ond initiative relates to Pullmantur’s focus on the cruise
business and expansion in Latin America. During the
fourth quarter of 2013, we moved forward with activi-
ties related to this initiative. We expect to incur an
estimated remaining amount of $32 million of cash
outlays, mostly through the end of 2014, to complete
these initiatives. We believe the cash outlays will be
offset by increased cash inflows from the expected
cost savings.
We also continue to implement a number of initiatives
to reduce energy consumption and, by extension, fuel
costs. These include the design of more fuel efficient
ships and the implementation of other hardware and
energy efficiencies.
If (i) any person other than A. Wilhelmsen AS. and
Cruise Associates and their respective affiliates (the
“Applicable Group”) acquires ownership of more than
33% of our common stock and the Applicable Group
owns less of our common stock than such person, or
(ii) subject to certain exceptions, during any 24-month
period, a majority of the Board is no longer comprised
of individuals who were members of the Board on the
first day of such period, we may be obligated to pre-
pay indebtedness outstanding under the majority of
our credit facilities, which we may be unable to replace
on similar terms. Certain of our outstanding debt
securities also contain change of control provisions
that would be triggered by the acquisition of greater
than 50% of our common stock by a person other
than a member of the Applicable Group coupled with
a ratings downgrade. If this were to occur, it would
have an adverse impact on our liquidity and operations.
DEBT COVENANTS
Certain of our financing agreements contain financial
covenants that require us, among other things, to
maintain minimum net worth of at least $5.9 billion, a
fixed charge coverage ratio of at least 1.25x and limit
our net debt-to-capital ratio to no more than 62.5%.