NORWEGIAN CRUISE LINE: Raises $2.2-Bil After Going Concern Warning

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Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) on May 6, 2020, announced it successfully secured over $2 billion of additional liquidity in response to impacts of the COVID-19 global pandemic on the Company and the cruise industry, including the temporary suspension of voyages, and to safeguard against a further downside scenario.

The announcement comes a day after the cruise operator said it may be forced to file for bankruptcy protection, saying that there’s “substantial doubt” about its ability to keep operating amid the coronavirus pandemic.

On May 5, the company announced the launch of a series of capital markets transactions, led by Goldman Sachs, to raise approximately $2 billion. The transaction has since been upsized to gross proceeds of $2.225 billion — $2.4 billion if the underwriters exercise their full overallotment options — due to significant oversubscription and demand across all three offerings. The transactions consisted of:

(1) $400 million public offering of common equity,

(2) $750 million exchangeable senior notes offering,

(3) $675 million senior secured notes offering and

(4) $400 million private investment from global consumer-focused private equity firm L Catterton.

Contingent on completion of the transactions, the Company expects to have approximately $3.5 billion of liquidity. This significantly strengthens the Company’s financial position and liquidity runway and it now expects to be positioned to withstand well over 12 months of voyage suspensions in a potential downside scenario. While this is not the Company’s base case expectation, the Company has taken a swift and proactive approach to protect its future given the significant uncertainty and unknown duration of the COVID-19 global pandemic. When the transactions are completed, the additional liquidity alleviates management’s concern about the Company’s ability to continue as a going concern for the next 12 months.

About Norwegian Cruise Line

Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is a global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. With a combined fleet of 28 ships with approximately 59,150 berths, these brands offer itineraries to more than 490 destinations worldwide. The Company will introduce nine additional ships through 2027.

At Dec. 31, 2019, the Company had a total of approximately $6 billion of total long-term debt obligations. Beginning on or around March 12, 2020, NCL Corporation Ltd. (“NCLC”) borrowed the full amount of $1.55 billion under its $875 million revolving credit facility, dated as of January 2, 2019 and maturing on January 2, 2024, with JPMorgan Chase Bank, N.A. (“JPM”), as administrative agent and as collateral agent, and certain other lenders party thereto, and its $675 million revolving credit facility, dated as of March 5, 2020 and maturing on March 4, 2021, with JPM, as administrative agent and as collateral agent, and certain other lenders party thereto.

The Company has implemented a suspension of all cruise voyages for its three brands due to the continued spread of COVID-19, growing travel restrictions and limited access to ports around the world. As of April 24, 2020, advanced bookings for the remainder of 2020 were meaningfully lower than the prior year with pricing down mid-single digits.

In March 2020, Moody’s downgraded the long-term issuer and senior unsecured debt ratings of NCLC to Ba2 from Ba1, including its corporate family rating and senior secured bank facility, and to B1 from Ba2 on its senior unsecured rating. In April 2020, S&P Global downgraded the issuer credit rating of NCLC to BB- from BB+.

“As a result of the impact of the COVID-19 pandemic, our financial statements contain a statement regarding a substantial doubt about the Company’s ability to continue as a going concern and we anticipate needing additional financing, and such financing may not be available on favorable terms, or at all, and may be dilutive to existing shareholder, we expect a net loss on both a U.S. GAAP and adjusted basis for the quarter ended March 31, 2020 and year ending December 31, 2020, and our ability to forecast our cash inflows and additional capital needs is hampered, and we will be required to raise additional capital,” the Company said in a May 5, 2020 regulatory filing.

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