Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) (the “Company”)
announced today that it has closed on a series of related balance
sheet and cash flow optimization transactions initiated last week.
The net result of these strategic transactions is significantly
favorable for the Company and its shareholders as it reduces annual
interest expense, lowers leverage, extends the Company’s debt
maturity profile and increases its liquidity. A key benefit of
these related transactions is that assuming the newly issued 1.125%
exchangeable senior notes due 2027 (the “2027 Exchangeable Notes”)
are settled entirely in cash, at the Company’s election, the
Company will benefit from a net reduction in its diluted shares
outstanding of approximately 5.2 million shares.
“The completion of these balance sheet and cash
flow optimization transactions represents an important milestone
for our Company as we have now taken the first significant step
forward in executing on our post-crisis financial recovery plan,”
said Mark A. Kempa, Executive Vice President and Chief Financial
Officer of Norwegian Cruise Line Holdings Ltd. “We are focused on
maximizing value for all of our key stakeholders and we believe
this transaction delivers long-term benefits from multiple
perspectives by reducing our annual interest expense, reducing our
outstanding debt, extending our debt maturities and increasing
liquidity, all while providing additional flexibility to limit
future shareholder dilution. While our ability to clearly and fully
communicate the significant and expected multiple benefits of these
transactions to our valued shareholders was limited by contractual
and legal restrictions prior to completion of these transactions,
we are pleased to now be able to convey the highlights of the
transactions to our various stakeholders.”
Key elements of the optimization transactions
include:
- Issuance of $1,150
million aggregate principal amount of 2027 Exchangeable Notes,
which includes the full exercise of the greenshoe option. The
initial exchange rate per $1,000 principal amount of 2027
Exchangeable Notes is 29.6850 ordinary shares, which is equivalent
to an initial exchange price of approximately $33.69 per ordinary
share, subject to adjustment in certain circumstances.
- Repurchase of
$715.9 million aggregate principal amount of its 6.00% exchangeable
senior notes due 2024 (the “2024 Exchangeable Notes”) for
approximately $1.4 billion.
- Issuance of
46,858,854 ordinary shares to certain existing holders of the 2024
Exchangeable Notes at a price of $23.64 per share, resulting in net
proceeds of approximately $1.1 billion.
- A portion of the
net proceeds from the issuance of the ordinary shares will be used
to redeem $236.25 million aggregate principal amount of the
Company’s 12.25% senior secured notes due 2024 and $262.50 million
aggregate principal amount of the Company’s 10.250% senior secured
notes due 2026.
The Company anticipates that the expected net
effect of the optimization transactions, which are outlined as
follows, will increase shareholder
value:
Estimated Annualized Interest Expense Savings: |
Approximately $86 million |
Reduction in Diluted Shares Outstanding1: |
Approximately 5.2 million |
Debt Principal Reduction: |
Approximately $65 million |
Additional Liquidity (After Estimated Expenses and Fees): |
Approximately $259 million |
By repurchasing the majority of the 2024
Exchangeable Notes, which are required to be settled entirely in
ordinary shares of the Company, the Company was able to remove
approximately 52.1 million shares from its diluted share count,
which was partially offset by the issuance of approximately 46.9
million shares in the equity offering. The 2027 Exchangeable Notes
may be settled at the Company’s election, in cash, ordinary shares
or a combination of cash and ordinary shares, preserving
flexibility for the Company to manage shareholder dilution in the
future. Assuming the Company elects, in accordance with the terms
of the indenture governing the 2027 Exchangeable Notes, to settle
the 2027 Exchangeable Notes entirely in cash, the net result from
the optimization transactions would be a reduction in diluted
shares outstanding of approximately 5.2 million shares.
For additional details on the strategic
rationale and expected impact of these balance sheet optimization
transactions please view an investor presentation, which can be
found at https://www.nclhltd.com/investors and
here.
About Norwegian Cruise Line Holdings
Ltd.
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH)
is a leading global cruise company which operates the Norwegian
Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands.
With a combined fleet of 28 ships with approximately 60,000 berths,
these brands offer itineraries to more than 490 destinations
worldwide. The Company has nine additional ships scheduled for
delivery through 2027, comprising approximately 24,000 berths.
Cautionary Statement Concerning Forward-Looking
Statements
Some of the statements, estimates or projections
contained in this press release are “forward-looking statements”
within the meaning of the U.S. federal securities laws intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical facts contained in this press
release, including, without limitation, those regarding the
benefits of the transactions described herein, including estimates
of annualized interest savings, additional liquidity and reduction
in diluted shares outstanding, our business strategy, financial
position, results of operations, plans, prospects, actions taken or
strategies being considered with respect to our liquidity position,
valuation and appraisals of our assets and objectives of management
for future operations (including those regarding expected fleet
additions, our suspension of certain cruise voyages, our ability to
weather the impacts of the novel coronavirus (“COVID-19”) pandemic,
our expectations regarding the resumption of cruise voyages and the
timing for such resumption of cruise voyages, the implementation of
and effectiveness of our health and safety protocols, operational
position, demand for voyages, plans or goals for our sustainability
program and decarbonization efforts, our expectations for future
cash flows and probability, financing opportunities and extensions,
and future cost mitigation and cash conservation efforts and
efforts to reduce operating expenses and capital expenditures) are
forward-looking statements. Many, but not all, of these statements
can be found by looking for words like “expect,” “anticipate,”
“goal,” “project,” “plan,” “believe,” “seek,” “will,” “may,”
“forecast,” “estimate,” “intend,” “future” and similar words.
Forward-looking statements do not guarantee future performance and
may involve risks, uncertainties and other factors which could
cause our actual results, performance or achievements to differ
materially from the future results, performance or achievements
expressed or implied in those forward-looking statements. Examples
of these risks, uncertainties and other factors include, but are
not limited to, the impact of:
- the spread of
epidemics, pandemics and viral outbreaks and specifically, the
COVID-19 pandemic, including its effect on the ability or desire of
people to travel (including on cruises), which are expected to
continue to adversely impact our results, operations, outlook,
plans, goals, growth, reputation, cash flows, liquidity, demand for
voyages and share price;
- our ability to
comply with the United States Centers for Disease Control and
Prevention’s (“CDC”) Conditional Order and any additional or future
regulatory restrictions on our operations and to otherwise develop
enhanced health and safety protocols to adapt to the pandemic’s
unique challenges;
- legislation
prohibiting companies from verifying vaccination status;
- coordination
and cooperation with the CDC, the federal government and global
public health authorities to take precautions to protect the
health, safety and security of guests, crew and the communities
visited and the implementation of any such precautions;
- our ability to
work with lenders and others or otherwise pursue options to defer,
renegotiate, refinance or restructure our existing debt profile,
near-term debt amortization, newbuild related payments and other
obligations and to work with credit card processors to satisfy
current or potential future demands for collateral on cash advanced
from customers relating to future cruises;
- our need for
additional financing, or financing to optimize our balance sheet,
which may not be available on favorable terms, or at all, and may
be dilutive to existing shareholders;
- our
indebtedness and restrictions in the agreements governing our
indebtedness that require us to maintain minimum levels of
liquidity and otherwise limit our flexibility in operating our
business, including the significant portion of assets that are
collateral under these agreements;
- the accuracy of
any appraisals of our assets as a result of the impact of the
COVID-19 pandemic or otherwise;
- our success in
controlling operating expenses and capital expenditures;
- our guests’
election to take cash refunds in lieu of future cruise credits or
the continuation of any trends relating to such election;
- trends in, or
changes to, future bookings and our ability to take future
reservations and receive deposits related thereto;
- the
unavailability of ports of call;
- future
increases in the price of, or major changes or reduction in,
commercial airline services;
- adverse events
impacting the security of travel, such as terrorist acts, armed
conflict and threats thereof, acts of piracy, and other
international events;
- adverse
incidents involving cruise ships;
- adverse general
economic and related factors, such as fluctuating or increasing
levels of unemployment, underemployment and the volatility of fuel
prices, declines in the securities and real estate markets, and
perceptions of these conditions that decrease the level of
disposable income of consumers or consumer confidence;
- any further
impairment of our trademarks, trade names or goodwill;
- breaches in
data security or other disturbances to our information technology
and other networks or our actual or perceived failure to comply
with requirements regarding data privacy and protection;
- changes in fuel
prices and the type of fuel we are permitted to use and/or other
cruise operating costs;
- mechanical
malfunctions and repairs, delays in our shipbuilding program,
maintenance and refurbishments and the consolidation of qualified
shipyard facilities;
- the risks and
increased costs associated with operating internationally;
- fluctuations in
foreign currency exchange rates;
- overcapacity in
key markets or globally;
- our expansion
into and investments in new markets;
- our inability
to obtain adequate insurance coverage;
- pending or
threatened litigation, investigations and enforcement actions;
- volatility and
disruptions in the global credit and financial markets, which may
adversely affect our ability to borrow and could increase our
counterparty credit risks, including those under our credit
facilities, derivatives, contingent obligations, insurance
contracts and new ship progress payment guarantees;
- our inability
to recruit or retain qualified personnel or the loss of key
personnel or employee relations issues;
- our reliance on
third parties to provide hotel management services for certain
ships and certain other services;
- our inability
to keep pace with developments in technology;
- changes
involving the tax and environmental regulatory regimes in which we
operate; and
- other factors set forth under the
section entitled “Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2020 and our
Quarterly Reports on Form 10-Q for the periods ended March 31,
2021, June 30, 2021 and September 30, 2021.
Additionally, many of these risks and
uncertainties are currently amplified by and will continue to be
amplified by, or in the future may be amplified by, the COVID-19
pandemic. It is not possible to predict or identify all such risks.
There may be additional risks that we consider immaterial or which
are unknown.
The above examples are not exhaustive and new
risks emerge from time to time. Such forward-looking statements are
based on our current beliefs, assumptions, expectations, estimates
and projections regarding our present and future business
strategies and the environment in which we expect to operate in the
future. These forward-looking statements speak only as of the date
made.
We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statement to reflect any change in our expectations
with regard thereto or any change of events, conditions or
circumstances on which any such statement was based, except as
required by law.
Investor Relations & Media Contact
Jessica John(305) 468-2339InvestorRelations@nclcorp.com
1 Assumes the Company elects to settle the 2027 Exchangeable
Notes entirely in cash. Actual reduction in dilution may
differ.
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