Norwegian Cruise Line Holdings Ltd. and NCL Corporation Ltd. Announce Exchangeable Notes Refinancing Transaction

Rhea-AI Summary

Norwegian Cruise Line Holdings (NCLH) has announced a refinancing transaction involving its subsidiary NCL The deal includes exchanging $285.4 million of 5.375% Exchangeable Senior Notes due 2025 for new 0.875% Exchangeable Senior Notes due 2030, plus a cash payment of $51.6 million.

Concurrent with this exchange, NCLH is conducting a registered direct offering of 2.7 million ordinary shares at $19.06 per share to the note holders. The proceeds will fund the cash payment component. The transaction is expected to close around April 7, 2025.

Key highlights include:

• Reduction of approximately 12.5 million shares outstanding on a fully diluted basis
• Neutral impact on company leverage
• Initial exchange rate of 38.1570 ordinary shares per $1,000 principal amount
• Initial exchange price of $26.21 per share, representing a 37.5% premium
• $164.6 million of 2025 Notes will remain outstanding after the exchange

Positive

• Significant reduction in interest rate from 5.375% to 0.875% on exchanged notes
• Reduction of 12.5 million shares outstanding on fully diluted basis
• Neutral impact on company leverage
• Extension of debt maturity from 2025 to 2030

Negative

• Additional cash payment of $51.6 million required for the exchange
• Dilution from new share issuance of 2.7 million shares
• Premium exchange price at 37.5% above current share price indicates potential future dilution risk

Insights

Financial Analyst

NCLH's refinancing transaction offers multiple benefits to its capital structure while extending its debt maturity profile. The company is exchanging $285.4 million of its 5.375% notes due 2025 for new 0.875% notes due 2030, accompanied by a $51.6 million cash payment. This strategic move substantially reduces the interest burden by 450 basis points on the refinanced portion, generating significant interest savings over the extended term.

The transaction's design is particularly impressive as it's leverage-neutral while simultaneously reducing fully diluted shares by approximately 12.5 million. This represents roughly 5% of NCLH's outstanding shares, creating meaningful shareholder value by minimizing dilution. The new 2030 notes' exchange price of $26.21 represents a 37.5% premium over the current share price, establishing a higher threshold for potential future conversions.

What's particularly notable is how NCLH has structured this transaction to address both near-term debt concerns and long-term capital efficiency. By keeping $164.6 million of the 2025 notes outstanding, the company maintains flexibility while pushing a significant portion of its obligations five years forward at substantially better terms. This balanced approach to liability management demonstrates prudent financial stewardship focused on extending maturities, reducing interest expenses, and optimizing the capital structure without increasing leverage.

MIAMI, April 02, 2025 (GLOBE NEWSWIRE) -- Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) (the “Company”) and NCL Corporation Ltd., a subsidiary of the Company (“NCLC”), announce that NCLC has entered into individually negotiated note exchange agreements with certain existing holders (the “Holders”) of NCLC’s 5.375% Exchangeable Senior Notes due 2025 (the “2025 Notes”), pursuant to which NCLC and the Holders have agreed to exchange (the “Exchange”) $285,425,000 in aggregate principal amount of the Holders’ 2025 Notes for (i) $285,425,000 in aggregate principal amount of NCLC’s newly issued 0.875% Exchangeable Senior Notes due 2030 (the “2030 Notes”) and (ii) an aggregate cash payment (the “Cash Payment”) of $51,624,820, plus accrued and unpaid interest on the 2025 Notes to be exchanged to, but excluding, the closing date of the Exchange. The Cash Payment will be equal to the proceeds from the concurrent Equity Offering, as described below, and represents the remainder of NCLC’s exchange obligation in excess of the aggregate principal amount of the 2025 Notes to be exchanged.

Concurrently, the Company announces a registered direct offering of 2,708,533 ordinary shares to the Holders at a price of $19.06 per share (the “Equity Offering” and together with the Exchange, the “Transactions”). The Company expects to use the proceeds from the Equity Offering to make the Cash Payment.

The closing of the Transactions is expected to occur on or about April 7, 2025, subject to customary closing conditions. Following the Exchange, approximately $164,565,000 in aggregate principal amount of the 2025 Notes will remain outstanding. The Transactions will be neutral to the Company’s leverage and, as of closing of the Transactions, are expected to reduce the Company’s shares outstanding on a fully diluted basis by approximately 12.5 million shares.

The 2030 Notes will be general senior unsecured obligations of NCLC and guaranteed by the Company. Holders may exchange all or a portion of the 2030 Notes at the holder’s option (i) at any time prior to the close of business on the business day immediately preceding October 15, 2029, subject to the satisfaction of certain conditions and during certain periods, and (ii) on or after October 15, 2029 until the close of business on the business day immediately preceding the maturity date, regardless of whether such conditions have been met. Upon exchange of the 2030 Notes, NCLC will satisfy its exchange obligation by paying cash up to the aggregate principal amount of the 2030 Notes to be exchanged and paying or delivering, as the case may be, cash, ordinary shares or a combination of cash and ordinary shares, at NCLC’s election, in respect of the remainder, if any, of NCLC’s exchange obligation in excess of the aggregate principal amount of the 2030 Notes to be exchanged. The initial exchange rate per $1,000 principal amount of 2030 Notes is 38.1570 ordinary shares, which is equivalent to an initial exchange price of approximately $26.21 per ordinary share, subject to adjustment in certain circumstances. The initial exchange price represents a premium of approximately 37.5% above the offering price in the Equity Offering.

Barclays Capital Inc. is acting as the exclusive placement agent for the Equity Offering. The Equity Offering is being made under an automatic shelf registration statement filed with the U.S. Securities and Exchange Commission (“SEC”) on November 8, 2023. The Equity Offering may be made only by means of a prospectus supplement and the accompanying prospectus, which will be filed with the SEC and will be available on the SEC’s website at www.sec.gov.

The 2030 Notes are being issued in a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The 2030 Notes, the guarantee of the Company and the ordinary shares issuable upon the exchange of the 2030 Notes, if any, will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration and qualification under the securities laws of such state or jurisdiction.

About Norwegian Cruise Line Holdings Ltd.

Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is a leading global cruise company that operates Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises. With a combined fleet of 33 ships and approximately 70,050 berths, NCLH offers itineraries to approximately 700 destinations worldwide. NCLH expects to add 12 additional ships across its three brands through 2036, which will add approximately 37,500 berths to its fleet.

Cautionary Statement Concerning Forward-Looking Statements

Some of the statements, estimates or projections contained in this press release are “forward-looking statements” within the meaning of the U.S. federal securities laws intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this press release, including statements regarding the Transactions, may be forward-looking statements. Many, but not all, of these statements can be found by looking for words like “expect,” “anticipate,” “goal,” “project,” “plan,” “believe,” “seek,” “will,” “may,” “forecast,” “estimate,” “intend,” “future” and similar words. Forward-looking statements do not guarantee future performance and may involve risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. For a discussion of these risks, uncertainties and other factors, please refer to the factors set forth under the sections entitled “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” in our most recently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and subsequent filings with the SEC. These factors are not exhaustive and new risks emerge from time to time. There may be additional risks that we consider immaterial or which are unknown. Such forward-looking statements are based on our current beliefs, assumptions, expectations, estimates and projections regarding our present and future business strategies and the environment in which we expect to operate in the future. These forward-looking statements speak only as of the date made. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations with regard thereto or any change of events, conditions or circumstances on which any such statement was based, except as required by law.

Investor Relations & Media Contact

Sarah Inmon
(786) 812-3233
InvestorRelations@nclcorp.com

FAQ

What is the size of NCLH's 2025 Notes exchange transaction announced in April 2025?

NCLH is exchanging $285.425 million of 5.375% Notes due 2025 for new 0.875% Notes due 2030, plus a cash payment of $51.624 million.

How many shares is Norwegian Cruise Line Holdings (NCLH) offering in the April 2025 equity offering?

NCLH is offering 2,708,533 ordinary shares at $19.06 per share through a registered direct offering.

What is the exchange price premium for NCLH's new 2030 Notes?

The initial exchange price of $26.21 represents a 37.5% premium above the equity offering price.

How will the 2025 refinancing transaction affect NCLH's share count?

The transaction is expected to reduce NCLH's shares outstanding on a fully diluted basis by approximately 12.5 million shares.

What amount of NCLH's 2025 Notes will remain outstanding after the exchange?

Approximately $164.565 million in aggregate principal amount of the 2025 Notes will remain outstanding.