Business Context and Reporting Period
This Form 8-K Current Report, dated January 8, 2019, details Norwegian Cruise Line Holdings Ltd. (NCLH) entering into material definitive agreements for new ship orders and associated financing. The report covers the announcement of two new vessels and the confirmation of financing structures for four vessels in total.
Key Financial Metrics and Agreements
New Ship Orders
- OCI 1 Vessel: Expected delivery in 2022; Contract price of €578,700,000.
- OCI 2 Vessel: Expected delivery in 2025; Contract price of €578,700,000. Effectiveness subject to SACE and SIMEST approvals.
- Leo 5 & Leo 6 Vessels: Previously announced options confirmed for delivery in 2026 and 2027 respectively; Contract price of €800,000,000 each.
Financing Structure
- Facility Type: Multi-draw term loan facilities entered into on December 19, 2018, effective January 8, 2019.
- Lenders: BNP Paribas (agent), Crédit Agricole, HSBC, and others.
- Loan Amounts (Maximum):
- Leo 5 Vessel: $954,854,771.78 (subject to FX adjustment).
- Leo 6 Vessel: €663,900,414.94.
- OCI 1 Vessel: $690,718,070.54.
- OCI 2 Vessel: €480,248,962.66.
- Utilization: Loans fund 80% of the final contract price and 100% of SACE premiums. No borrowings occurred as of January 8, 2019.
- Interest Rates:
- Fixed: 3.64% (OCI 1, Leo 5), 1.39% (OCI 2), 1.44% (Leo 6).
- Floating: Euribor/Libor + margin (1.45% for OCI 1/Leo 5, 1.15% for OCI 2, 1.20% for Leo 6).
- Repayment: 24 equal semi-annual installments beginning 6 months after delivery or disbursement.
- Security: Guaranteed by NCLC; secured by first lien ship mortgages and equity interests. 100% insurance by SACE expected for all vessels, subject to conditions.
Material Changes
The filing represents a significant expansion of NCLH's fleet and debt obligations. The company has added two new vessels (OCI 1 and OCI 2) to its order book and secured financing for four vessels (Leo 5, Leo 6, OCI 1, OCI 2). This increases the company's future capital expenditure commitments and potential debt load, though no cash has been drawn as of the report date.
Guidance, Risks, and Contingencies
- Conditions Precedent: The effectiveness of the orders and financing for the Leo 5, Leo 6, and OCI 2 vessels is contingent upon approvals from SACE S.p.A. and SIMEST S.p.A.
- Forward-Looking Statements: Delivery dates and financing approvals are not guaranteed.
- Risk Factors: The filing lists standard risks including travel security, economic conditions, fuel price volatility, currency fluctuations, overcapacity, regulatory changes, and the ability to recruit personnel. Specific risks related to this transaction include the potential termination of commitments if construction contracts are terminated or if SACE insurance becomes unenforceable.
Investor Verification Checklist
- Verify the status of SACE and SIMEST approvals required for the Leo 5, Leo 6, and OCI 2 vessels.
- Monitor the final contract prices, which are subject to adjustment, and the impact of EUR/USD exchange rate fluctuations on the USD-denominated loan amounts.
- Review the impact of the new debt covenants on NCLH's overall leverage and liquidity ratios.
- Confirm the timeline for the first disbursement of funds relative to the construction progress payments.
- Assess the market demand for the additional capacity expected from these vessels upon delivery between 2022 and 2027.