Norwegian Cruise Line reports $1.9bn loss

Posted on 15 May, 2020 by Spacejunkie2

Norwegian Cruise Line reported a first-quarter loss of $1.9 billion, with the impact of a coronavirus-enforced suspension of sailings exacerbated by a $1.6 billion write-down in goodwill.

However, Norwegian Cruise Line insisted it is now “well-positioned” to withstand even 18 months of suspended operations after raising $2.4 billion in funds in early May.

Norwegian Cruise Line president and chief executive officer Frank Del Rio said: “We’ve taken decisive action to strengthen our financial position, including our highly successful and oversubscribed $2.4 billion capital raise announced last week.

“We believe this, coupled with other liquidity-enhancing initiatives, makes us well-positioned to weather an unlikely scenario of over 18 months of suspended voyages.”

Del Rio added: “We continue to experience demand for voyages in the future across our three brands.

“As we prepare to resume sailings, we’re working alongside the US and global public health agencies and governments to develop and implement enhanced cruise health and safety standards.”

He reported, “demand for cruise vacations particularly beginning in the fourth quarter of 2020, accelerating through 2021”.

Norwegian described overall bookings and pricing for 2021 as “within historical ranges”.

The cruise line noted all three of its brands had begun the year “in a record booked position and at higher prices” than last year despite a 7% increase in capacity.

However, it reported “slightly over half of the guests” had declined to rebook or accept cruise credits in place of cash refunds for cancelled cruises despite being offered “typically 125% of the cruise fare paid.

The company’s credits are valid through to the end of December 2022.

Norwegian revealed it had $1.8 billion of advance ticket sales at the end March, of which $800 million were for cancelled voyages to the end of June and $370 million for voyages scheduled for the second half of this year.

The company said it continues to take bookings for later this year, 2021 and 2022, and to receive new deposits and final payments.

Norwegian reported it has pared its operating costs to between $70 million and $110 million per month while voyages are suspended, following a series of cost-cutting measures.

Additional capital-spending reductions and deferred debt payments mean its monthly cash burn has been reduced to between $120 million and $160 million per month.

However, this excludes cash refunds to customers.

Norwegian noted it had debts totalling $8.6 billion at the end of March, with available cash and cash equivalents of just $1.4 billion.

However, a series of capital markets transactions launched on May 5 had raised $2.4 billion, including a $400 million investment by US private equity firm L Catterton.

Norwegian Cruise Line chief financial officer Mark Kempa said: “Our swift actions to preserve cash and secure additional liquidity provide a strong foundation to withstand the operational and financial impact of Covid-19.

“We are confident the company can navigate through an unlikely extended zero-revenue scenario and emerge in a strong position.”

Under stress, NCL Holdings hit a liquidity grand slam

Posted on 8 May, 2020 by Spacejunkie2

Arnie Weissmann (left) and Frank Del Rio at Travel Weekly’s CruiseWorld in 2018. Photo Credit: Jamie Biesiada

In the first of two parts of a wide-ranging interview with Travel Weekly editor in chief Arnie Weissmann, Norwegian Cruise Line Holdings CEO Frank Del Rio gave the back story on closing a $2.4 billion round in tough times. Part 2: Del Rio on relaunching and the importance of travel advisors in cruising’s recovery.

On March 13, Norwegian Cruise Line Holdings CEO Frank Del Rio learned that to stem the spread of Covid-19 on cruise ships, the Centers for Disease Control and Prevention (CDC) had issued a no-sail order, effectively halting cruising out of U.S. ports.

No cruising, no revenue. No revenue, no assurance of the liquidity needed to survive for an unknowable amount of time. “I knew our world was going to change,” Del Rio told Travel Weekly in an interview on Thursday.

Del Rio sees the journey from potential ruin to bountiful liquidity as a testimony to the resiliency of cruising and NCLH’s unique position in the cruising ecosystem.

On Wednesday, Del Rio finished what would be considered a remarkable round of funding even during the best of times. His underwriter, Goldman Sachs, told him it was the first simultaneous “quad” it had seen: releasing a private placement memorandum and at the same time announcing three different kinds of public capital. And, as icing on the cake of the $2.23 billion initially announced, an oversubscription in each tranche triggered what Wall Street calls a “greenshoe” event, allowing additional shares to be sold, bringing the total above $2.4 billion.

Wall Street heavyweights get green light to start their own stock ...

What should have been an unqualified grand slam was temporarily dampened when some investors and media noticed two sentences in a 59-page public filing on Tuesday which seemed to disclose “substantial doubt” about the company’s ability to continue “as a going concern,” and another warning that, should investment not be forthcoming, “it may be necessary for us to reorganize our company in its entirety, including through bankruptcy proceedings.”

The language, Del Rio said, was a “mandatory, technical accounting reporting requirement that our auditor, Price Waterhouse, was required to issue in conjunction with the offering memorandum.” Though the details the following day about the success of the offering would render the point moot, NCL stock dropped 22% the day before the full scope of the investments were announced.

The $2.4 billion, combined with $1.1 billion in cash the company already had, “probably gives us the biggest liquidity cushion — the longest runway — of any company in the cruise space,” Del Rio said. “I challenge you to find another company in any industry that can say that they can withstand a 100% cessation of operations with zero revenue for more than 18 months.”

When this is all over, Del Rio asserts, “Norwegian will be one of the survivors, one of the success stories. This was truly a team effort. Yesterday I addressed them all, and it was a very emotional moment because what was being saved was a great institution. We invented the cruise industry more than 50 years ago and I would be damned if, under my watch, that was going to change.”

Norwegian Announces Upsizing and Pricing of 36,363,636 Ordinary Shares

Posted on 6 May, 2020 by Spacejunkie2

Norwegian Joy

Norwegian Cruise Line Holdings announced that it has priced its underwritten public offering of 36,363,636 ordinary shares of the company at a price to the public of $11.00 per share.

The amount of ordinary shares to be issued was increased to approximately $400 million from the previously announced $350 million.

The company has granted the underwriters an option to purchase up to 5,454,545 of additional ordinary shares, which option must be exercised on or before June 6, 2020.

The offering is expected to close on May 8, 2020, subject to customary closing conditions.