Royal Caribbean: 'No Assurance' We'll Be Able To Finance Oasis Of The Seas

With just nine months to go until Royal Caribbean is scheduled to take delivery of the world's largest cruise ship, the much-ballyhooed Oasis of the Seas, financing to pay for the $1.2 billion vessel remains in doubt, the company said Tuesday in a regulatory filing.

"Although we believe that we will be able to (finance the ship), there can be no assurance that we will be able to do so or that we will be able to do so on acceptable terms," the company warned in its annual 10-K filing with the U.S. Securities and Exchange Commission.

The 5,400-passenger vessel, which has been under construction in Finland for several years, is scheduled to be delivered to Royal Caribbean in November.

Royal Caribbean noted it has commitments for government financing guarantees from Finnvera, the export credit agency of Finland, for 80% of the financed amount of Oasis and a sister ship also under construction, Allure of the Seas. But it has yet to line up actual financing for the vessels.

"The disruption in the credit markets has resulted in a lack of liquidity worldwide (that) may affect our ability to successfully raise capital or to do so on acceptable terms," the company warned.

Royal Caribbean noted credit rating agencies Standard & Poors and Moody's both have lowered its credit rating over the past year, and cash flow at the company is under pressure due to the decrease in consumer cruise spending as a result of the current economic climate.

"These factors may prevent us from having sufficient available capital or financing to meet our needs or to do so on acceptable terms," the company said. "There is no assurance that our credit ratings will not be lowered further. The lowering of our credit ratings may increase our cost of financing and can make it more difficult for us to access the financial markets."