MIAMI — One day after warning it could face bankruptcy, Norwegian Cruise Line Holdings said Wednesday it and its U.S. subsidiary planned to raise an additional $225 million amid strong demand for a planned debt sale.
The amount would increase the struggling cruise line’s cash on hand to approximately $3.5 billion. Shares popped as much as 6.8% in Wednesday trading before falling back to flat territory.
In a filing, Norwegian said it now planned to price $750 million of its 6.00% exchangeable senior notes due 2024 — up from $650 million. The cruise company also said it would price $675 million aggregate principal amount of its 12.25% senior secured notes due 2024 — up from the previously announced $600 million. And an equity offering would be increased from $350 million to $400 million.
Jaime Katz, senior equity analyst at financial services group Morningstar, said the news means “capital markets are still functioning.”
“Investors are willing to take risk to achieve yield, given the pricing of the senior notes,” Katz said.
In a note to investors prior to Wednesday’s news of the cash increase, investment firm Wedbush said even the initial offering showed Norwegian was likely to survive.
“What seems to be getting missed is that the company now has the cash in place to survive until mid-to-late 2021 even under a worst case net cash outflow scenario,” it said. “While we have been relatively bearish with respect to our assumptions as to when the industry is likely to open back up much less go back to ‘normal,’ the liquidity recently added by NCLH would seem to put the company in a sound position under the majority of plausible scenarios, no small feat given the gauntlet that they needed to run through in recent months to ensure the company’s survival.”
Norwegian, like all other cruise lines, still faces significant headwinds, as some investors remain unsure about whether demand for voyages will recover once the coronavirus pandemic eases. Norwegian has also announced furloughs to staff and cuts in capital expenditures. And litigation expenses could also mount, the company has previously warned.
On April 9, the Centers for Disease Control and Prevention announced an extension of its U.S. cruise sailings suspension for as many as 100 more days. Norwegian has said it will halt cruises at least through June 30.
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