Norwegian Cruise Line Holdings Ltd. (NCLH) has successfully secured over $2 billion of additional liquidity so it is “well-positioned” to weather the suspension of operations during the Covid-19 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.
The transactions consisted of a $400 million public offering of common equity, $750 million exchangeable senior notes offering, $675 million senior secured notes offering and a $400 million private investment from global consumer-focused private equity firm L Catterton.
Contingent on completion of the transactions, the company said on May 6 that it expects to have approximately $3.5 billion of liquidity. The move came a day after NCLH said there were doubts about its ability as “a going concern.”
“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,” the company said in a news release. “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.”
A financial analyst report by Wedbush concurs. “What seems to be getting missed is that the company now has the cash in place to survive until mid-to-late-2021 even under a worst-case net cash outflow scenario,” the report said. “While we have been relatively bearish with respect to our assumptions as to when the industry is likely to open back up, much less go back to ‘normal’, the liquidity recently added by NCLH would seem to put the company in a sound position under the majority of plausible scenarios, no small feat given the gauntlet that they needed to run through in recent months to ensure the company’s survival.”
NCLH operates Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.
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