Norwegian Cruise Line Holdings recently announced that it successfully secured over $2 billion of additional liquidity in response to the effects of the coronavirus pandemic on the company. Last week, the cruise lines announced that it expected a cash burn of $100 to $150 million per month.
As the company has grounded the majority of its fleet, it secured over a year of cash on hand for a worst-case zero-revenue scenario. The cruise lines also declared that it will launch a series of capital markets transactions. The initiative will be led by Goldman Sachs and raise approximately $2 billion. As a result of significant oversubscription and demand across all three offerings, the transaction has since been upsized to gross proceeds of $2.225 billion ($2.4 billion if the underwriters exercise their full over-allotment options).
The transactions included the public offering of common equity worth around $400 million, exchangeable senior notes offering, and $675 million senior secured notes offering. It also consisted of a $400 million private investment from L Catterton, the global consumer-focused private equity firm. In addition, it also planned to resort to a number of cost-cutting measures ranging from layoffs to deferred loan payments on company ships.
The company expects to have approximately $3.5 billion of liquidity as a result of the contingent on completion of the transactions. This would significantly strengthen the company’s financial position and liquidity runway. According to a press statement by the company, it also expects to be positioned to withstand well over 12 months of voyage suspensions in a potential downside scenario.
