Norwegian Cruise Line sees ‘substantial doubt’ about its future, warns of possible bankruptcy as it seeks to raise $2 billion

CNBC ^ | May 5, 2020 | William Feuer

[C19fan]

watch now

VIDEO01:30 Norwegian Cruise Line warns of possible bankruptcy

Norwegian Cruise Line warned on Tuesday that it may have to seek bankruptcy protection, saying there’s “substantial doubt” about its ability to continue as a “going concern” as the coronavirus pandemic wreaks havoc on the industry. Shares of the company fell more than 19% in early trading on the news.

In a securities filing, Norwegian said it was in compliance with all of its debt agreements as of March 31, but it couldn’t guarantee that it may need to seek waivers from its lenders. If it cannot amend its credit agreements, the company said it is at risk of default, which would trigger immediate repayment of most of its debt and derivatives contracts. That puts it at risk of bankruptcy.

[LouieFisk]

I just believe passengers should pick up their own tab, not the taxpayers. They want to risk it, they pay for the damages.

Maybe require passengers to be able to show up front, before they board, they can afford to pay for any medical and other disease associated cost (including “final expenses”. Assets that are liquid or can be quickly converted to cash.

You are incorrect that this type of thing has just suddenly become a problem. I been around a few years and seen more than my share of stories on the Lov...errr...Disease Boats. If someone just fell off the turnip truck it might seem like news, but it’s been an ongoing problem for years and years.
By way of getting you up to speed, a quick sampling of a few reports from before this year:
https://abcnews.go.com/US/270-cruise-ship-passengers-sickened-norovirus-royal-caribbean/story?id=60291868
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1497653/
https://www.jstor.org/stable/4460997?seq=1
https://www.nbcnews.com/think/opinion/cruise-ship-nightmare-after-measles-norovirus-outbreaks-why-does-anyone-ncna1043516

[usconservative]

Last year I and my GF booked an Alaska Cruise with NCL, schedule to depart Vancouver on June 4th of this year.

Last week NCL finally sent an email notifying us our cruise has been cancelled and offered us the following options:

1. We could rebook our cruise for anytime 2021/2022 and receive a 125% booking credit and also get a 20% "bonus" to be used for anything from offshore excursions to "upgrades" on board.

2. We could apply online for a full refund, to be paid back to us within 90 days.

Yesterday GF and I talked about what we wanted to do. I let her talk me into re-booking the same cruise for 2021. Thankfully, we haven't done it yet and are going to be applying for full refunds.

It's a shame really, I *like* NCL. Been on several cruises with them. Their service is outstanding, they're the only cruise line that didn't have China Virus issues and didn't have boats wandering the sea for extended periods of time as this whole virus bullshit was breaking loose. Their ships are meticulously maintained and long before this China Virus crap broke loose they always had people cleaning surfaces. I think that's why they didn't have problems.

Their CEO made the decision an easy one this morning and frankly, it probably wasn't the smartest thing for him to say unless he's planning on sticking his hand out for a bailout (which is probably his intent....)

[Brasky]

I think they should ask Norweiga for a bailout.

[usconservative]

My wife and I went on our first cruise ever from Feb. 8-15, just before the world went all to hell. It was on the Norwegian Breakaway, and it was spectacular.

I was on that same ship in May of last year for a Honduras/Belize/Mexico cruise. IIRC our cabin was #8425. Mid-ship, smooth ride. Yes, it's a beautiful ship and the crew was nothing short of outstanding. Loved every minute of that trip.

[usconservative]

Carnival owns nine brands in total. Royal Caribbean IIRC is the largest cruise line. Between the two they’ve pretty much cornered the cruise industry world-wide.

[drjimmy]

Since it was our first time, we went all out and booked a Haven Spa Suite, and absolutely everything about our cruise went amazingly well. We never once felt like there were 4,000 other people on board.

[usconservative]

I don't recall a single complaint I've ever had about NCL. From the very first time I stepped on one of their ships I was just impressed with how clean and well organized everything was.

This is going to sound silly however one of my favorite and funniest memories on an NCL cruise was going to the buffet late at night just to get some fruit and cheese for a late night snack and seeing members of the crew singing "Washy Washy good for you, good for me, good for us! Washy Washy good for you ...w a a a a a ssshhhhyyy w a a a a a a ssshhhyyy!"

They always sang songs about washing ones hands going into the buffet. At the "restaurants" on board they always had someone out there with a spray bottle and/or a hand disinfectant there prompting to wash hands before entering.

Every offshore excursion same thing: they had hand washing stations setup before entering the ship, crew members spraying hand disinfectant, giving warm towels to wipe with, etc..

NCL's focus on cleanliness was just so obvious everywhere. It's a shame what's happening, I really like them as a cruise line and wouldn't go with anyone else.

[Magic Fingers]

Is your daughter-in-law furloughed or is she still getting paid?

[OpusatFR]

Did you read the article?

Taxpayers?

“The company hopes to raise another $1.6 billion from issuing a mix of stock and bonds. The L Catterton investment is contingent on the company raising at l billion from other investors...’

“The company also announced that L Catterton, a private equity fund, invested $400 million in NCL Corp., a subsidiary of Norwegian. Under the agreement, L Catterton will be entitled to nominate one member to the board.”

It is a private equity firm.

They haven’t asked for the US government to give them money.

Cut and paste articles doesn’t give anyone an overview of an industry. Having a cursory knowledge gained by scanning MSM articles does not give anyone a full picture of the industry.

[wetgundog]

There goes my Latitude points, Damn! Been on three NCL cruises, all great and trouble free. It was a good cruise line from my experience.

[LouieFisk]

“They haven’t asked for the US government to give them money.”
—
They won’t have much luck getting an equity firm to throw away money. The industry is not sustainable.
Also, what I;m speaking of is the cost to the public in having to treat, transport, quarantine the sick and handling all the dead. This is done by the government, even the military has to be involved, e.g. -
“Cruise Ship Passengers to Be Quarantined 4 Military Bases: Pentagon”
https://www.military.com/daily-news/2020/03/09/cruise-ship-passengers-be-quarantined-4-military-bases-pentagon.html

Taxpayers always get stuck with the bill in disasters. But we got enough natural ones - floods, earthquakes, hurricanes - we really don’t need planned manmad ones to to round the bill out.

[JimRed]

I’ll go- if they let me drive!

[JimRed]

.If they can get the same job done with less people, they'll get rid of the rest of them.

That's why every time government tells nonessential personnel not to report to work, I ask why they have not got rid of them!

[mass55th]

I have no idea. My son said she was furloughed, but I believe he said she wasn't getting paid. I told him to have her file for unemployment, and he said she couldn't because she wasn't unemployed. So I have no idea if she's getting a check from anywhere. He is the type of guy who isn't very forthcoming about things, so I don't push it. I spoke to him a few days ago, and asked him about her health insurance since she's been out. He said not to worry about it...that they are "doing fine"... but he's the type of person that if he had to have his leg amputated, he'd say everything was fine. I have been helping them financially since he was diagnosed in March of last year with cancerous polyps, and had to stop working, but he doesn't like to have to ask for help.

I know my son is getting some disability, and has filed for SS Disability because the neuropathy in his hands and feet is bad, and it will probably never go away. It was a side effect of the chemo. He tried to go back to work after his chemo ended last fall, but he has to use a computer for his job, and the pain was too severe. He's also recently been getting hives every day. They don't know if he's developed an allergy he never had before because they took all those lymph nodes out. The only thing they can think of is that he developed an allergy to pet hair. They have a cat and a dog.

[CraigEsq]

Highly unlikely they’re going to go bankrupt. $2 billion in cash will get them through over a year without a dime of income. Plus, they just renegotiated the mortgages (is that the term for a ship?) for their five newest cruise ships courtesy of Germany, with all payments deferred for 12 months, saving them millions of dollars every month.

This is likely little more than SEC-mandated over disclosure to avoid future allegations that they didn’t disclose all the risks. Prospectuses are full of risks that have next to zero chance of actually happening, just because they legally have to be in there.

I hope to be able to go on my cruise with them this October for my anniversary. *fingers crossed*

Oh, and cruise ships are generally among the cleanest places you can be.

[MinorityRepublican]

Yep that’s Capitalism. J.P. Morgan would buy up all the ships and form a new company in 2021 or 2022 after the virus goes away.

[OpusatFR]

“They won’t have much luck getting an equity firm to throw away money. The industry is not sustainable.”

I’d have to disagree there. I bet they do and more besides from offerings.

The industry is not sustainable? What analyst said that!

[OpusatFR]

“Plus, they just renegotiated the mortgages (is that the term for a ship?)...”

Yeah, isn’t that wild? I guess its not liking a loan for a Chris Craft runabout with an inboard motor.

[CraigEsq]

“They won’t have much luck getting an equity firm to throw away money. The industry is not sustainable.”

Carnival had no issue raising several billion dollars in less than a day last month. And the industry had been slowly but steadily increasing in revenue across the various cruise lines over the last few years. Seems quite sustainable to me.

[LouieFisk]

“The industry is not sustainable? What analyst said that!”
—
Even if they could find a sugar daddy to bail them out, the daddy won’t be there to keep bailing them out. The virus is going nowhere and there is no cure or vaccine. The disaster-bankrupt-bailout cycle just isn’t a good lather, rines and repeat business plan.
At any rate, it’s my thinking that in the middle of a pandemic to which the cruise industry contributed, where meat is being rationed and toilet paper is a hard to find luxury item, that cruise ships aren’t going to generate too much sympathy for their ongoing financial woes. Maybe if an investor needed a money-pit tax write-off to offset successes and didn’t mind world class headaches.