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Royal Caribbean Cruises Ltd. (NYSE:RCL), the cruise operator with a market capitalization of $56 billion and impressive revenue growth of 18.6% in the last twelve months, has entered into a credit agreement for the financing of its seventh Oasis-class vessel, set for delivery in the second quarter of 2028. According to InvestingPro analysis, the company’s stock is currently trading near its Fair Value. The announcement, detailed in a recent 8-K filing, was made public on Monday.
Under the terms of the agreement finalized on March 28, 2025, the company will receive a US dollar-denominated term loan upon the ship’s delivery. The loan, backed 100% by BpiFrance Assurance Export, France’s official export credit agency, will be repaid semi-annually over twelve years. Interest is expected to be charged at Term SOFR plus 0.85% annually. This adds to Royal Caribbean’s existing total debt of $20.8 billion, though the company maintains strong operational performance with $5.7 billion in EBITDA.
The credit agreement includes standard events of default and prepayment clauses, covering situations such as non-payment, covenant breaches, insolvency on other indebtedness, substantial judgments, and changes in the company’s control.
Several lenders involved in the facility, along with their affiliates, have ongoing financial service relationships with Royal Caribbean, from which they derive customary fees.
This financial move supports Royal Caribbean’s expansion efforts, as the Oasis-class ships are among the world’s largest and most innovative cruise vessels. The credit agreement’s details are provided in an exhibit attached to the SEC filing, which serves as the basis for this report. For deeper insights into Royal Caribbean’s financial health and growth prospects, including exclusive ProTips and comprehensive analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Royal Caribbean Cruises has been the focus of multiple analyst reports and strategic financial maneuvers. CFRA recently upgraded Royal Caribbean’s stock to a Buy rating, raising the price target to $297, based on optimistic earnings projections for 2025 and 2026. This follows a comprehensive review of the company’s earnings report, which surpassed expectations, leading to an upward revision of earnings per share estimates. Meanwhile, BNP Paribas (OTC:BNPQY) Exane initiated coverage with an Outperform rating and a $262 price target, highlighting Royal Caribbean’s innovative strategies, such as its private island developments, as key drivers for potential revenue growth.
Jefferies, however, took a more cautious stance, assigning a Hold rating with a $230 price target, suggesting that the stock’s current valuation may limit further upside. In a separate development, Royal Caribbean announced a financial strategy to exchange $200 million of its Convertible Senior Notes for cash and stock, aiming to optimize its capital structure. This transaction is expected to close in March 2025 and is part of the company’s ongoing efforts to manage its financial obligations effectively. Additionally, the travel sector, including Royal Caribbean, faced a downturn due to reduced profit forecasts from major airlines, raising concerns about consumer spending and economic conditions. These developments reflect the dynamic environment in which Royal Caribbean operates, as it continues to navigate both opportunities and challenges in the travel industry.
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