Norwegian Cruise Line Holdings has moved to raise more than $2 billion in new financing in an effort to survive the Covid-19 crisis.
The action involves the issuing of bonds, a public offering of shares and a $400 million investment by private equity firm L Catterton.
The owner of Norwegian Cruse Line, Oceania Cruises and Regent Seven Seas Cruises warned on Tuesday that disruption from the Covid-19 pandemic and debt maturities over the next year have raised “substantial doubt” over its ability to remain a going concern in the absence of fresh financing
The company expects to have approximately $3 billion of liquidity,” contingent on completion of the transactions, a spokesperson for NCLH told Bloomberg.
It will leave NCLH positioned to withstand well over 12 months of voyage suspensions in a potential downside scenario, the spokesperson added.
Revenue has been squeezed as governments around the world imposed travel restrictions and locked down residents to stay to stem the spread of Covid-19.
The firm suspended cruises until at least June 30, furloughed about 20% of its workforce until July 31 and is burning about $110 million to $150 million a month during the suspension of operations by its 28 ships.
About half customers who have had cruises cancelled have requested cash refunds. Those who have accepted future cruise credits can use them until the end of 2022.
But the company said in a filing to the US Securities and Exchange Commission (SEC): “There can be no assurance that the percentage of passengers that accept future cruise certificates over cash refunds will remain in this range as the number of cancelled voyages increases.
“The use of such credits may prevent us from future cash collections as staterooms booked by guests with such credits will not be available for sale, resulting in less cash collected from bookings to new guests; however, we may benefit from the onboard revenue from these guests.
“Norwegian continues to take future bookings for 2020, 2021 and 2022, and receive new customer deposits and final payments on these bookings which will offset a portion of the outflow from expected cash refunds.”
NCLH has nine new ships on order, scheduled to be delivered by 2027.
“We expect that the effects of Covid-19 on the shipyards where our ships are under construction, or will be constructed, will result in delays in ship deliveries, which may be prolonged,” the company said.
NCLH also said it would delay its first-quarter earnings report. Preliminary figures showed the company expects a net loss for the three months to March 31 of as much as $1.9 billion against a profit of $118 million for the same period last year.
Scott Dahnke, global co-chief executive of L Catterton, said: “The cruise industry has been very resilient over a long period of time, driven by strong secular tailwinds and a high level of guest satisfaction. People enjoy cruising, with many guests taking multiple voyages over time.
“The 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.”
NCLH president and chief executive Frank Del Rio said: “L Catterton is the ideal partner for our company as they recognise the remarkable resilience the cruise industry has demonstrated over the past 50 years, appreciate the long-term global demand for cruise vacations, and value our company’s long track record of growth, execution and success.”
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