Norwegian Cruise Line Holdings has warned of its ability to continue as a “going concern” in the wake of the coronavirus pandemic.
Shares in the parent company of Norwegian Cruise Line, Regent Seven Seas Cruises and Oceania Cruises dropped as a result of NCLH’s latest statement in which it said there was concerns over its ability to raise sufficient capital to eliminate the “substantial doubt” about its ability to continue operating.
In the statement to the United States Securities and Exchange Commission, the cruise company said it hoped to raise new capital through a combination of debt, equity and an investment from a private-equity firm. However it highlighted that the suspension of cruises and a decline in future bookings were causes for concern.
It said the coronavirus crisis and the effect it would have on people’s desire to travel was expected to “continue to impact [NCLH’s] results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price”.
It said: “This is the first time we have completely suspended our cruise voyages, and as a result of these unprecedented circumstances, we are not able to predict the full impact of such a suspension on our company. In addition, the magnitude and duration of the global pandemic is uncertain. Consequently, we cannot estimate the impact on our business, financial condition or near- or longer-term financial or operational results with certainty.”
It continued: “The company has taken, and anticipates taking, additional actions to increase liquidity, extend debt maturities, delay obligations and reduce operating costs. In addition, the company has been evaluating a number of financing transactions that, if successful, would provide net proceeds which are anticipated to be sufficient to provide the liquidity necessary to satisfy its obligations over the next twelve months, including the maintenance of minimum levels of liquidity required by certain of our debt agreements.
“There can be no assurance, however, that the company will be able to complete such transactions and raise sufficient additional capital or take other actions that will provide it with sufficient liquidity to satisfy its obligations over the next twelve months or maintain minimum levels of liquidity as required by certain of our debt agreements.”
Separately, NCL Corporation, a subsidiary of NCLH, announced a $400 million investment from private equity fund L Catterton.
Frank Del Rio, president and chief executive officer of NCLH, said: “We are pleased to execute this agreement with L Catterton, the largest and most global consumer-focused private equity firm in the world.
“L Catterton is the ideal partner for our Company as they recognize 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. We look forward to working with their highly experienced team and broad collection of portfolio companies to identify and capture additional value across a range of strategic and operational levers.”