NCLH moves to shore up finances
NORWEGIAN Cruise Line Holdings (NCLH) has admitted the effects of COVID-19 on the shipyards where it has nine newbuilds on order are likely to result in potentially prolonged delays to deliveries, with the pandemic “expected to depress demand for cruise vacations into the foreseeable future”.
The downbeat brief was part of a filing with the US Securities and Exchange Commission overnight, which also confirmed a range of measures to raise about US$2 billion to boost the company’s liquidity.
Without raising cash, the financial report cited “substantial doubts about the company’s ability to continue as a going concern,” but also detailed share offerings, US$515 million in capital expenditure reductions and other financing measures currently being finalised.
Additionally, NCLH is in negotiations to further reduce spending by US$170 million for newbuild-related payments.
The company said that as of 31 Mar it has US$1.8 billion in advanced ticket sales, including about US$850m for previously announced voyage cancellations.
As of 24 Apr about half the guests on cancelled sailings with Norwegian Cruise Line, Oceania Cruises and Regent Severn Seas Cruises have requested cash refunds, the company said.
“We continue 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”.
The wide-ranging update also confirmed the company is facing three class action lawsuits that allege it made false and misleading statements to the market and to its customers about COVID-19.
Shares in the company slumped almost 25% in trading after the announcement was released.
However the update also confirmed a US$400 million convertible note placement with private equity firm L Catterton, which said the cruise sector had overcome numerous challenges in the past.
“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 financier said.
“We couldn’t be more excited to support the team at Norwegian as they work through this suspension of travel and begin to commence operations after their voluntary suspension of voyages,” it added.