Norwegian Cruise Line Holdings unveils investment plan after 'substantial doubt' raised over its ability to continue
Norwegian Cruise Line Holdings (NCLH), the parent company of Norwegian Cruise Line, Regent Seven Seas Cruises and Oceania Cruises, is looking to raise $2 billion in a new financing effort to survive the impact of coronavirus.
The refinancing plan includes the issuing of bonds, a public offering of shares and a $400 million investment by private equity firm L Catterton.
If the plan were successful it would leave the cruise giant, with around $3 billion of liquidity and in a stronger position to withstand up to 12 months of voyage suspensions, in a worst-case scenario, a company spokeperson told Bloomberg.
Scott Dahnke, global co-chief executive of L Catterton, added: “The cruise industry has overcome numerous challenges in the past, and we expect that the industry will rebound and prosper with even further enhancements to their already rigorous health and safety protocols in place in the future.”
The action was taken after NCLH raised "substantial doubt" about its ability to continue as a "going concern".
In a statement to the United States Securities and Exchange Commission, NCLH said the suspension of cruise voyages and decline in advance bookings, due to the coronavirus crisis, coupled with debt maturities and other obligations over the next year were the major factors behind this bleak financial picture.
Without the additional financing, the company’s future hangs in the balance.
“The company does not have sufficient liquidity to meet its obligations over the next 12 months, assuming no financing or other proactive measures," it said in a statement.
“The company has taken, and anticipates taking, significant additional actions to increase liquidity, extend debt maturities, delay obligations and reduce operating costs.”
The statement confirmed the company had been evaluating a number of financing transactions that could provide the necessary liquidity over the next 12 months.
However, it warned there were no guarantees of success: “There can be no assurance, however, that the company will be able to complete any such financing transaction, raise additional capital, finalize additional amortization deferrals or that revenues will increase rapidly enough to offset operating losses that will provide with sufficient liquidity to satisfy its obligations over the next 12 months, or maintain minimum levels of liquidity as required by certain of our debt agreements.”
The company has currently suspended all cruise operations until July 1. The company is offering 125 per cent future cruise credits to those affected. However, approximately half of the affected guests are reported to have requested cash refunds and the uncertainty of when operations will be able to resume is weighing heavily on the business.
“We cannot predict when any of our ships will begin to sail again or when ports will reopen to our ships,” a statement said. “Moreover, even once travel advisories and restrictions are lifted, demand for cruises may remain weak for a significant length of time and we cannot predict if and when each brand will return to pre-outbreak demand or pricing.”
NCLH owns 28 ships across the three brands and has another nine on order for delivery by 2027.
The warning from Norwegian comes a day after Carnival Cruise Line, the world's biggest single cruise line, with 27 ships, revealed it was planning to start a phased return to operations from August 1.
