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Item 1.01
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Entry into a Material Definitive Agreement.
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Indenture
On July 20, 2020, Carnival Corporation (together
with Carnival plc, the “Company,” “we,” “us,” or “our”) closed its previously announced
private offering (the “Notes Offering”) of $775 million aggregate principal amount of 10.500% Second-Priority Senior
Secured Notes due 2026 (the “USD Notes”) and €425 million aggregate principal amount of 10.125% Second-Priority
Senior Secured Notes due 2026 (the “Euro Notes” and, together with the USD Notes, the “Secured Notes”).
The Secured Notes were issued pursuant to an Indenture, dated as of July 20, 2020 (the “Indenture”), among Carnival
Corporation, Carnival plc, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee and security
agent.
The Secured Notes mature
on February 1, 2026 unless earlier redeemed or repurchased. No sinking fund is provided for the Secured Notes. Cash interest
on the USD Notes and the Euro Notes will accrue from July 20, 2020 and is payable semi-annually in arrears on February 1 and August
1 of each year, beginning on February 1, 2020, at a rate of 10.500% and 10.125% per year, respectively.
The
Secured Notes are fully and unconditionally guaranteed, jointly and severally, on a second-priority senior secured basis by Carnival
plc and certain of Carnival Corporation’s and Carnival plc’s subsidiaries that own or operate the Company’s vessels
and material intellectual property. In the future, each of Carnival Corporation’s and Carnival plc’s subsidiaries (other
than immaterial subsidiaries) that guarantees certain other indebtedness of Carnival Corporation, Carnival plc or any other guarantor,
including, in each case, indebtedness in an aggregate principal amount in excess of $300 million, will guarantee the Secured Notes.
The Secured Notes and
the related guarantees are generally secured by second-priority security interests in the collateral, which generally includes
(i) shares of capital stock of each subsidiary guarantor, subject to customary limitations; (ii) 83 of the vessels currently owned
or operated by Carnival Corporation, Carnival plc and the other guarantors including assignments of insurance claims and earnings
in respect of such vessels; (iii) the material intellectual property currently owned or controlled by Carnival Corporation, Carnival
plc and the other guarantors; (iv) other assets of Carnival Corporation, Carnival plc and the other guarantors consisting of inventory,
trade receivables, intangibles, computer software and casino equipment, in each case associated with the vessels being mortgaged;
and (v) other assets on which Carnival Corporation, Carnival plc and the other guarantors may elect from time to time to grant
a lien securing the Secured Notes (clauses (i) through (v), collectively, the “Collateral”), subject to permitted liens
and certain exclusions and release provisions as further described in the Indenture and the related security documents.
On or after August 1,
2023, Carnival Corporation may redeem the Secured Notes at its option, in whole at any time or in part from time to time, upon
giving not less than 10 nor more than 60 days’ notice, at the redemption prices set forth in the Indenture. In addition,
prior to August 1, 2023, Carnival Corporation may redeem the Secured Notes at its option, in whole at any time or in part from
time to time, upon giving not less than 10 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal
amount of the Secured Notes redeemed, plus a “make-whole” premium and accrued and unpaid interest. Notwithstanding
the foregoing, at any time and from time to time prior to August 1, 2023, Carnival Corporation may redeem up to 40% of the original
aggregate principal amount of the Secured Notes (calculated after giving effect to any issuance of additional notes) using the
net cash proceeds of one or more equity offerings at a redemption price equal to 110.500% (in the case of USD Notes) or 110.125%
(in the case of Euro Notes), plus accrued and unpaid interest, so long as at least 50% of the original aggregate principal amount
of the Secured Notes (calculated after giving effect to any issuance of additional notes) remains outstanding after each such redemption.
Carnival Corporation may also redeem the Secured Notes, in whole but not in part, at any time, upon giving not less than 10 nor
more than 60 days’ prior written notice to the holders of the Secured Notes, at a redemption price equal to 100% of the principal
amount thereof, together with accrued and unpaid interest, if any, to, but not including, the redemption date, if Carnival Corporation
or any guarantor would have to pay any additional amounts on the Secured Notes due to a change in tax laws, regulations or rulings
or a change in the official application, administration or interpretation of such laws, regulations or rulings, which in each case
is announced and becomes effective after July 15, 2020.
The Indenture contains
covenants that limit the ability of Carnival Corporation, Carnival plc and their restricted subsidiaries to, among other things:
(i) incur additional indebtedness or issue certain preferred shares; (ii) make dividend payments on or make other distributions
in respect of their capital stock or make other restricted payments; (iii) make certain investments; (iv) sell certain
assets; (v) create liens on assets; (vi) consolidate, merge, sell or otherwise dispose of all or substantially all of
their assets; and (vii) enter into certain transactions with their affiliates. These covenants are subject to a number of
important limitations and exceptions. Additionally, upon the occurrence of specified change of control triggering events,
Carnival Corporation shall offer to repurchase the Secured Notes at 101% of the principal amount, plus accrued and unpaid interest,
if any, to, but not including, the purchase date.
The Indenture
sets forth certain events of default after which the Secured Notes
may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving
Carnival Corporation, Carnival plc, any of our or Carnival plc’s significant subsidiaries or any group of our or Carnival
plc’s subsidiaries that, taken together, would constitute a significant subsidiary after which the Secured Notes
become automatically due and payable.
The obligations
of Carnival Corporation under the Indenture and the Secured Notes issued thereunder will be secured by second-priority security
interests in the Collateral for the benefit of the secured parties under the Indenture, pursuant to collateral agreements, pledge
agreements, charge agreements and collateral assignments to be entered into on or after July 20, 2020 under the laws of the United
States and certain other jurisdictions, which security interests will be perfected on or after July 20, 2020 in accordance with
the agreed security principles described in the Indenture. Those security interests are subject to intercreditor agreements governing
the rights and priorities of the secured parties under the Indenture and the holders of certain other indebtedness outstanding
on July 20, 2020 or incurred in the future.
The Secured Notes were
offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities
Act of 1933, as amended (the “Securities Act”), or to non-U.S. investors in reliance on Regulation S under the Securities
Act. The Secured Notes were not, and will not be, registered under the Securities Act or any state securities laws and may not
be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the
Securities Act and applicable state laws.
The description
of the Indenture and the Secured Notes above is qualified in its entirety by reference to the text of the Indenture and the form
of Note attached thereto, which will be filed with the next periodic report of Carnival Corporation.