Norwegian Cruise Line Holdings is proposing a $790m bond sale to refinance existing debt as the company provided investors insight into its third-quarter performance, including the disclosure that it has swept aside all calls in Israel until at least the end of the year.
The New York-listed cruise giant said its NCL Corp subsidiary will sell the senior secured notes, which will mature in 2029, in a private offering to institutional buyers.
The new debt securities will be backed by 14 vessels, which are also securing a credit facility and another series of notes due in 2028.
“We intend to use the net proceeds from the notes offering, together with cash on hand, to repay the term loans outstanding under our senior secured credit facility, including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses,” Miami-based Norwegian said.
In a disclosure related to the bond sale filed with the US Securities & Exchange Commission, the company said it is continuing to experience strong consumer demand, and it is at an “optimal booked position” for the next 12 months.
“Onboard revenue generation remained robust during the quarter with broad-based strength across all revenue streams,” Norwegian said.
“We also continue to make solid progress on our ongoing margin enhancement initiative, which includes efforts to rightsize our cost base.”
But Norwegian said that during the third quarter and into the current three-month period, high fuel prices, fires in Maui and the conflict in Israel have impacted its operations.
The company also said it is cancelling and redirecting all port calls in Israel for the rest of the year after the country became embroiled in a war with Hamas militants in the Gaza Strip.
“We will continue to closely monitor and evaluate future sailings with calls to Israel and adjust as needed,” Norwegian said. “Prior to the conflict, approximately 6% of our capacity in the fourth quarter of 2023 had visits to Israel.”
The company’s 2,186-berth Pride of America (built 2005), a rare US-flag cruise ship operating in Hawaii, modified its itineraries to avoid stressing local resources on the island of Maui after wildfires there.
“Following the wildfires, we also experienced a slowdown in close-in bookings for sailings in Hawaii, primarily concentrated in the fourth quarter of 2023,” the company said. “Demand has improved in recent weeks, and we expect this impact to be temporary.”
When it comes to fuel costs, Norwegian has hedged about 51% of its 2023 needs, as well as 26% of next year’s projected spend.
