Norwegian Cruise Lines Builds Liquidity With L Catterton

L Catterton has provided $400 million in exchangeable notes to NCL Corporation (NCLC), a subsidiary of publicly traded Norwegian Cruise Lines (NCL).

Norwegian Cruise Lines (NYSE: NCLH) is a global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. The company’s cruise itineraries range from a few days to 180-days calling on various locations, including destinations in Scandinavia, Russia, the Mediterranean, the Greek Isles, Alaska, Canada and New England, India and the rest of Asia, Tahiti and the South Pacific, Australia and New Zealand, Africa, South America, the Panama Canal, and the Caribbean. Norwegian Cruise Lines was founded in 1966 and is headquartered in Miami.

In addition to the new funds from L Catterton, NCL announced this morning that it has raised an additional $1.8 billion of capital comprised of $400 million in new equity and $1.4 billion in new bonds. NCL now has more than $3.5 billion of liquidity, which is enough for it to last for more than 12 months of voyage suspensions.

Norwegian Cruise Lines is the smallest of the big three cruise operators – behind Carnival Cruise Lines and Royal Caribbean Cruises – and suspended its operations in mid-March due to the COVID-19 pandemic. The Centers for Disease Control and Prevention last month extended its No Sail Order until July 24. Many cruise companies are now considering resuming North American cruises on a limited basis beginning August 1.

“The cruise industry has been very resilient over a long period of time, driven by strong secular tailwinds and a high level of guest satisfaction. People enjoy cruising, with many guests taking multiple voyages over time,” said Scott Dahnke, the global co-CEO of L Catterton. “The industry has overcome numerous challenges in the past, and we expect that the industry will rebound and prosper with even further enhancements to their already rigorous health and safety protocols in place in the future.”

The newly issued notes purchased by L Catterton are senior unsecured obligations of NCLC, guaranteed by NCLH, and are exchangeable at any time into preferred shares of NCLC and are automatically exchangeable into ordinary shares of NCLH. The notes are due in 2026 and accrue payment-in-kind interest of 7.0% for the first year; payment-in-kind interest of 4.5% and cash interest at 3.0% for the next four years; and cash interest at 7.5% in the final year.

“We are pleased to execute this agreement with L Catterton, the largest and most global consumer-focused private equity firm in the world,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Lines. “L Catterton is the ideal partner for our company as they recognize the remarkable resilience the cruise industry has demonstrated over the past 50 years, appreciate the long-term global demand for cruise vacations, and value our company’s long track record of growth, execution and success.”

Norwegian Cruise Lines has a combined fleet of 28 ships with more than 59,000 berths. The company has nine new ships on order which are scheduled for delivery through 2027, however the company expects delivery of the new vessels to be delayed as a result of COVID-19.

“Within the industry, the three brands of Norwegian Cruise Lines have carved out distinctive leadership positions in their respective markets, guided capably by Frank Del Rio and his exceptional management team,” added Mr. Dahnke. “We couldn’t be more excited to support the team at Norwegian as they work through this suspension of travel and begin to commence operations after their voluntary suspension of voyages.”

L Catterton invests from $50 million to $400 million of capital in consumer-focused companies. Areas of specific interest include food and beverage, retail and restaurants, consumer products and services, consumer health, and media and marketing services. The firm was founded in 1989 and has raised over $20 billion of equity capital across seven funds. L Catterton has 17 offices globally and is headquartered in Greenwich, Connecticut.