Norwegian Cruise Line Holdings Ltd 8-K, filed Jan 19, 2023
Norwegian Cruise Line Holdings Ltd. (NCLH)
About this 8-K
Norwegian Cruise Line Holdings Ltd filed this 8-K on January 19, 2023.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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CURRENT REPORT
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Item 2.02 Results of Operations and Financial Condition.
The information contained in Item 7.01 below is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On January 19, 2023, in connection with the Offering (as defined below), NCL Corporation Ltd. (“NCLC”), a subsidiary of Norwegian Cruise Line Holdings Ltd. (“NCLH”), distributed certain information attached to this report as Exhibit 99.1 to potential investors, which NCLH is disclosing under Items 2.02 and 7.01 of this report.
The information in Items 2.02 and 7.01, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any of NCLH’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Item 8.01 Other Events.
On January 19, 2023, NCLC issued a press release announcing that it is proposing to sell $500.0 million aggregate principal amount of its senior secured notes due 2028 (the “Notes”) in a private offering (the “Offering”) that is exempt from the registration requirements of the Securities Act. The Notes and the related guarantees will be secured by first-priority interests in, among other things and subject to certain agreed security principles, thirteen of our vessels that also secure our senior secured credit facility. The Notes will be guaranteed by our subsidiaries that own the vessels that will secure the Notes. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
NCLC intends to use the net proceeds from the Offering to repay a portion of the term loans outstanding under its senior secured credit facility that will become due in January 2024, including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses.
The Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act, and outside the United States, only to non-U.S. investors pursuant to Regulation S. The Notes and related guarantees will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
This report does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offering, solicitation or sale would be unlawful.
Cautionary Statement Concerning Forward-Looking Statements
Some of the statements, estimates or projections contained in this report 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 report, including, without limitation, those regarding 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 expectations regarding the COVID-19 pandemic, Russia’s invasion of Ukraine and general macroeconomic conditions, our expectations regarding cruise voyage occupancy, 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 profitability, 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, including the COVID-19 pandemic, and their effect on the ability or desire of people to travel (including on cruises), which is expected to continue to adversely impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price; |
| · | implementing precautions in coordination with regulators and global public health authorities to protect the health, safety and security of guests, crew and the communities we visit and to comply with regulatory restrictions related to the pandemic; |
| · | our indebtedness and restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and be in compliance with maintenance covenants and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements; |
| · | 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 our outstanding exchangeable notes and any future financing which may be dilutive to existing shareholders; |
| · | the unavailability of ports of call; |
| · | future increases in the price of, or major changes or reduction in, commercial airline services; |
| · | changes involving the tax and environmental regulatory regimes in which we operate, including new regulations aimed at reducing greenhouse gas emissions; |
| · | 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; |
| · | trends in, or changes to, future bookings and our ability to take future reservations and receive deposits related thereto; |
| · | adverse events impacting the security of travel, such as terrorist acts, armed conflict, such as Russia’s invasion of Ukraine, and threats thereof, acts of piracy, and other international events; |
| · | adverse incidents involving cruise ships; |
| · | adverse general economic and related factors, including as a result of the impact of the COVID-19 pandemic, Russia’s invasion of Ukraine or otherwise, such as fluctuating or increasing levels of interest rates, inflation, 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; |
| · | 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; |
| · | our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues; |
| · | our inability to obtain adequate insurance coverage; |
| · | pending or threatened litigation, investigations and enforcement actions; |
| · | any further impairment of our trademarks, trade names or goodwill; |
| · | 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 reliance on third parties to provide hotel management services for certain ships and certain other services; |
| · | fluctuations in foreign currency exchange rates; |
| · | our expansion into new markets and investments in new markets and land-based destination projects; |
| · | overcapacity in key markets or globally; 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, 2021 and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2022, June 30, 2022 and September 30, 2022. |
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, Russia’s invasion of Ukraine and the impact of general macroeconomic conditions. 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description |
| 99.1 | Disclosure provided to potential investors. |
| 99.2 | Press Release of NCL Corporation Ltd., dated January 19, 2023. |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Norwegian Cruise Line Holdings Ltd. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: January 19, 2023
| NORWEGIAN CRUISE LINE HOLDINGS LTD. |
| By: | /s/ Mark A. Kempa | |
| Name: | Mark A. Kempa | |
| Title: | Executive Vice President and Chief Financial Officer |
Exhibit 99.1
Recent Developments
Together with its consolidated subsidiaries, NCL Corporation Ltd. is referred to in this exhibit as the “Company,” “our,” “us” and “we” unless otherwise indicated.
Operations Update
The phased relaunch of our entire fleet was completed in May 2022 and the Company continues to demonstrate steady sequential improvement in Occupancy1 levels.
Due to significant improvements in the public health environment, we have been able to relax or eliminate most COVID-19-related protocols. The relaxation of protocols, continued easing of travel restrictions and reopening of most ports around the globe to cruise ships has improved travel experiences, expanded the addressable cruise market, allowed us to expand the variety of our itineraries and provided additional catalysts on the road to recovery. We continue to follow applicable travel guidelines and local protocols as required by the ports and destinations we visit.
Booking Environment and Outlook
As of December 31, 2022, our cumulative booked position was approximately 62% for full year 2023, in line with previously outlined expectations, and at higher prices than 2019 at a similar point in time. Fourth quarter Occupancy was approximately 87%, with the gap versus 2019 levels continuing to narrow sequentially. We are also experiencing strong and broad-based onboard revenue generation even as Occupancy increases.
However, due to continuing uncertainties in the operating environment, we cannot estimate how certain externalities will impact our business, financial condition or near- or longer-term financial or operational results with certainty; however, we will report a net loss for the quarter and full year ended December 31, 2022 and the first quarter of 2023.
Liquidity and Financial Recovery Plan
We continue to prioritize enhancing liquidity and financial flexibility in the current environment while seeking opportunities to optimize our balance sheet. As of September 30, 2022, our total debt position was $13.7 billion and our liquidity consisted of cash and cash equivalents of $1.2 billion and a $1.0 billion undrawn commitment less related fees.
We have taken the following additional actions to enhance our liquidity profile and financial flexibility since September 30, 2022:
| · | On December 6, 2022, we amended our senior secured credit facility to extend the maturities for approximately $1.4 billion thereunder by one year to January 2025. We also, among other things, amended certain financial covenants related to net debt to capitalization, free liquidity and consolidated EBITDA to consolidated debt service and obtained additional debt capacity of $1.5 billion, including approximately $0.5 billion of secured debt capacity. Following this amendment, our total available debt capacity under our senior secured credit facility is approximately $2.0 billion, including $0.5 billion of secured debt capacity, which is incremental to our existing $1.0 billion undrawn commitment. |
| · | On December 13, 2022 and December 16, 2022, we amended our export-credit backed loan facilities to amend, among other things, certain financial covenants related to net debt to capitalization, free liquidity and consolidated EBITDA to consolidated debt service. |
1
| Occupancy refers to the ratio of Passenger Cruise Days to Capacity Days, where Passenger Cruise Days refers to the number of passengers carried for the period, multiplied by the number of days in their respective cruises, and Capacity Days refers to berths available for sale multiplied by the number of cruise days for the period for ships in service. A percentage greater than 100% indicates that three or more passengers occupied some cabins. |
We expect to enter into an amendment to our $1 billion undrawn commitment, extending such commitment through February 2025.
Preliminary Financial Results for the Year Ended December 31, 2022
Our financial statements for the year ended December 31, 2022, are not yet complete. Accordingly, we are presenting preliminary estimates of certain financial information that we expect to report for the year ended December 31, 2022. The following information is based on our internal management accounts and reporting as of and for the year ended December 31, 2022, as compared to our audited results for the year ended December 31, 2021. Given the timing of these estimates, we have not completed our customary financial closing and review procedures.
The preliminary financial information included below has been prepared by, and is the responsibility of, our management. The preliminary estimated results of operations are subject to revision as we prepare our financial statements and disclosure for the year ended December 31, 2022, and such revisions may be significant. In connection with our annual closing and review process for the fiscal year 2022, we may identify items that would require us to make adjustments to the preliminary estimated results of operations set forth below. Accordingly, the final results and other disclosures for the year ended December 31, 2022 may differ materially from this preliminary estimated data. This preliminary estimated financial data should not be viewed as a substitute for financial statements prepared in accordance with GAAP. We expect to file our Annual Report on Form 10-K for the year ended December 31, 2022 no later than March 1, 2023. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled, nor applied agreed-upon procedures with respect to the preliminary estimated financial data for the year ended December 31, 2022. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.
Based on the foregoing, our total revenues are currently expected to be in the range of approximately $4.7 billion to $5.0 billion for the year ended December 31, 2022, compared to $0.6 billion for the year ended December 31, 2021. We expect Adjusted EBITDA to be nearly break-even for the six months ended December 31, 2022. As noted above, we expect to report a net loss for the quarter and full year ended December 31, 2022. Our liquidity consisted of cash and cash equivalents of approximately $1 billion and a $1 billion undrawn commitment less related fees as of December 31, 2022, compared to cash and cash equivalents and short-term investments of $1.7 billion and a $1 billion undrawn commitment less related fees as of December 31, 2021.
Terminology
Adjusted EBITDA. EBITDA adjusted for other income (expense), net and other supplemental adjustments.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, such as Adjusted EBITDA, to enable us to analyze our performance. See “Terminology” for the definitions of these non-GAAP financial measures. We believe that Adjusted EBITDA is appropriate as a supplemental financial measure as it is used by management to assess operating performance. We also believe that Adjusted EBITDA is a useful measure in determining our performance as it reflects certain operating drivers of our business, such as sales growth, operating costs, marketing, general and administrative expense and other operating income and expense. Adjusted EBITDA is not a defined term under GAAP nor is it intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income (loss), as it does not take into account certain requirements such as capital expenditures and related depreciation, principal and interest payments and tax payments and it includes other supplemental adjustments.
Exhibit 99.2
NCL Corporation Ltd. Announces Proposed Offerings of Senior Secured Notes
MIAMI, January 19, 2023 (GLOBE NEWSWIRE) -- NCL Corporation Ltd. (“NCLC”), a subsidiary of Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH), announced today that it is proposing to sell $500.0 million aggregate principal amount of its senior secured notes due 2028 (the “Notes”) in a private offering (the “Notes Offering”) that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).
The Notes and the related guarantees will be secured by first-priority interests in, among other things and subject to certain agreed security principles, thirteen of our vessels that also secure our senior secured credit facility. The Notes will be guaranteed by our subsidiaries that own the vessels that will secure the Notes.
We intend to use the net proceeds from the Notes Offering to repay a portion of the term loans outstanding under our senior secured credit facility that will become due in January 2024, including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses.
The Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act, and outside the United States, only to non-U.S. investors pursuant to Regulation S. The Notes and the related guarantees will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.
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 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 expectations regarding the impacts of the COVID-19 pandemic, Russia’s invasion of Ukraine and general macroeconomic conditions, our expectations regarding cruise voyage occupancy, 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 profitability, 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, including the COVID-19 pandemic, and their effect on the ability or desire of people to travel (including on cruises), which is expected to continue to adversely impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price; |
| · | implementing precautions in coordination with regulators and global public health authorities to protect the health, safety and security of guests, crew and the communities we visit and to comply with regulatory restrictions related to the pandemic; |
| · | our indebtedness and restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and be in compliance with maintenance covenants and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements; |
| · | 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 our outstanding exchangeable notes and any future financing which may be dilutive to existing shareholders; |
| · | the unavailability of ports of call; |
| · | future increases in the price of, or major changes or reduction in, commercial airline services; |
| · | changes involving the tax and environmental regulatory regimes in which we operate, including new regulations aimed at reducing greenhouse gas emissions; |
| · | 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; |
| · | trends in, or changes to, future bookings and our ability to take future reservations and receive deposits related thereto; |
| · | adverse events impacting the security of travel, such as terrorist acts, armed conflict, such as Russia’s invasion of Ukraine, and threats thereof, acts of piracy, and other international events; |
| · | adverse incidents involving cruise ships; |
| · | adverse general economic and related factors, including as a result of the impact of the COVID-19 pandemic, Russia’s invasion of Ukraine or otherwise, such as fluctuating or increasing levels of interest rates, inflation, 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; |
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| · | 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; |
| · | our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues; |
| · | our inability to obtain adequate insurance coverage; |
| · | pending or threatened litigation, investigations and enforcement actions; |
| · | any further impairment of our trademarks, trade names or goodwill; |
| · | 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 reliance on third parties to provide hotel management services for certain ships and certain other services; |
| · | fluctuations in foreign currency exchange rates; |
| · | our expansion into new markets and investments in new markets and land-based destination projects; |
| · | overcapacity in key markets or globally; 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, 2021 and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2022, June 30, 2022 and September 30, 2022. |
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, Russia’s invasion of Ukraine and the impact of general macroeconomic conditions. 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) 468-2339
InvestorRelations@nclcorp.com
NCLHmedia@nclcorp.com
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