In a securities filing given to the United States Securities and Exchange Commission on Tuesday, Norwegian Cruise Line Holdings Ltd. (NCL) warned it may have to seek bankruptcy protection, noting “management’s conclusion regarding substantial doubt about the Company’s ability to continue as a going concern.”
The filing says, at December 31, 2019 and March 31, 2020, NCL was in compliance with all of its debt covenants; however, if it cannot continue to remain in compliance with these agreements, the company would have to seek additional amendments and that “no assurances can be made that such amendments would be approved by our lenders.” Should an event of default under any debt agreement occur, then all of NCL’s outstanding debt and derivative contract payables could become due and all debt and derivative contracts could be terminated. This, according to CNBC, puts the company at risk of bankruptcy.
“COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which adversely affects our ability to obtain acceptable financing to fund resulting reductions in cash from operations,” the filing says. “The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price.”
It continues: “If we are not able to fulfill our liquidity needs through operating cash flows and/or borrowings under credit facilities or otherwise in the capital markets, our business and financial condition could be adversely affected and it may be necessary for us to reorganize our company in its entirety, including through bankruptcy proceedings.”
In a separate announcement on Tuesday, NCL Corporation Ltd., a subsidiary of Norwegian Cruise Line Holdings Ltd., announced a private placement of up to $400 million by an affiliate of L Catterton, a private equity firm.