Norwegian Cruise Line Raises Over $2 Billion After Warning Of Possible Bankruptcy

TOPLINE

A day after warning that it may be forced to file for bankruptcy, Norwegian Cruise Line on Wednesday announced that it had raised over $2 billion in funding to ensure that the company can withstand “well over” a year without revenue amid the coronavirus pandemic.

KEY FACTS

KEY BACKGROUND

In its SEC filing on Tuesday, Norwegian said that it would be forced to seek bankruptcy protection if it couldn’t raise enough liquidity. The company said it had roughly $6 billion in long-term debt obligations as of December 31, warning that it may “not have sufficient liquidity to meet its obligations over the next twelve months, assuming no additional financing.” While Norwegian is now better-positioned to weather the coronavirus pandemic, that doesn’t change the fact that widespread shutdowns and lockdowns have ground the global travel industry to a halt for the foreseeable future. Cruise operators, like Norwegian and its competitors Carnival
CCL.U
and Royal Caribbean Cruises, have all been especially hard-hit by the standstill in their businesses. Norwegian had originally suspended its fleets on March 14, along with other cruise operators who did the same—but the shutdown is now extended through at least June 30. On Monday, however, Carnival announced that it would resume its North American cruises on August 1. 

CRUCIAL QUOTE

“This significantly strengthens the Company’s financial position and liquidity runway,” Norwegian said in its press release. The additional capital raised will “safeguard against a further downside scenario,” as the coronavirus continues to wreak havoc on global travel and especially the cruise industry.

WHAT TO WATCH FOR

Norwegian Cruise Line
NCLH
confirmed on Tuesday that it expects to post a loss in the first quarter; The company reports earnings next week, on May 14. Royal Caribbean Cruises reports earnings after the market close today, while Carnival reports earnings on June 18.

FURTHER READING

Norwegian Cruise Line Stock Plunges 20% After Company Warns Of Possible Bankruptcy (Forbes)

Carnival Will Resume Cruises From Three Ports In August (Forbes)

CDC Extends No Sail Order For Cruise Ships (Forbes)

Norwegian & Royal Caribbean Down 80%. Is Either Now A Good Value? (Forbes)

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