Business Context and Reporting Period
This Form 8-K was filed by Norwegian Cruise Line Holdings Ltd. on March 5, 2020, with the report date of March 9, 2020. The filing addresses the company's response to continued uncertainty surrounding the COVID-19 coronavirus by securing additional liquidity through a new credit facility.
Key Financial Metrics and Liquidity
- New Credit Facility: Entered into the "Norwegian Epic Credit Agreement" for revolving loans with an aggregate principal amount of $675.0 million.
- Existing Facility: Maintains an $875.0 million senior secured revolving credit facility under NCL Corporation Ltd.
- Total Availability: As of March 9, 2020, total availability under both revolving credit agreements was $1.55 billion.
- Borrowings Drawn: No borrowings were drawn under either facility as of March 9, 2020.
- Interest Rate: LIBOR plus a margin of 0.80% per annum.
- Maturity Date: March 4, 2021.
Material Changes and Agreements
The primary material change is the entry into a definitive agreement to secure liquidity. The new facility is secured by a first priority perfected security interest in the equity of Norwegian Epic, Ltd., a first lien ship mortgage on the NORWEGIAN EPIC vessel, and first priority assignments of certain interests related to the vessel. Obligations are guaranteed by NCL Corporation Ltd.
Outlook, Risks, and Management Commentary
Management characterized the new credit agreement as a "proactive measure" taken due to the uncertainty of the COVID-19 pandemic. The funds are designated for general corporate purposes. The filing notes that the company may voluntarily terminate commitments subject to breakage fees. No specific revenue guidance or profit outlook is provided in this filing.
Investor Verification Checklist
- Verify the total debt load and leverage ratios of the company post-filing.
- Monitor the utilization rate of the $1.55 billion in available liquidity.
- Assess the impact of the first lien ship mortgage on the NORWEGIAN EPIC vessel on future asset refinancing.
- Track the progression of the COVID-19 pandemic's effect on cruise line operations and cash flow.