UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement.
On May 14, 2020, NCL Corporation Ltd. (“NCLC”), a subsidiary of Norwegian Cruise Line Holdings Ltd., closed its previously announced private offering (the “Secured Notes Offering”) of $675 million aggregate principal amount of 12.25% senior secured notes due 2024 (the “Secured Notes”). The Secured Notes were issued pursuant to an indenture, dated May 14, 2020, by and among NCLC, as issuer, the guarantors named therein and U.S. Bank National Association, as trustee, principal paying agent, transfer agent, registrar and security agent (the “Indenture”). NCLC expects to use the net proceeds from the Secured Notes Offering for general corporate purposes.
Interest on the Secured Notes will accrue from May 14, 2020 and is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2020, at a rate of 12.25% per year. The Secured Notes will mature on May 15, 2024 unless earlier redeemed or repurchased.
The Secured Notes and certain of the related guarantees will be secured by first-priority security interests in, among other things and subject to certain agreed security principles, collateral consisting of shares of capital stock in certain of NCLC’s subsidiary guarantors, two of NCLC’s vessels, NCLC’s material intellectual property and two islands that NCLC uses in the operations of its cruise business. Such collateral will be secured pursuant to collateral agreements, pledge agreements, charge agreements and collateral assignments to be entered into on or after May 14, 2020 under the laws of the United States and certain other jurisdictions, with such security interests perfected on or after May 14, 2020 in accordance with the agreed security principles described in the Indenture. The Secured Notes will also be guaranteed by certain of NCLC’s subsidiaries that own the property that will secure the Secured Notes, as well as certain additional subsidiaries whose assets will not secure the Secured Notes.
NCLC may, at its option, redeem all or a part of the Secured Notes (i) prior to February 15, 2024, at a redemption price equal to 100% of the principal amount of the Secured Notes to be redeemed plus an applicable “make-whole” amount, plus accrued and unpaid interest, if any, to, but excluding, the redemption date and (ii) on or after February 15, 2024, at a redemption price equal to 100% of the principal amount of the Secured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to February 15, 2022, NCLC may redeem up to 35% of the aggregate principal amount of the Secured Notes with the net proceeds of certain equity offerings, subject to certain restrictions. NCLC may also redeem the Secured Notes, in whole but not in part, following the occurrence of certain tax law changes at a redemption price equal to 100% of the principal amount of the Secured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The Indenture contains covenants that limit the ability of NCLC and its restricted subsidiaries to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or distributions on, or redeem or repurchase, equity interests and make other restricted payments; (iii) make investments; (iv) consummate certain asset sales; (v) engage in certain transactions with affiliates; (vi) grant or assume certain liens; and (vii) consolidate, merge or transfer all or substantially all of their assets. Additionally, upon the occurrence of specified change of control triggering events, NCLC may be required to offer to repurchase the Secured Notes at a repurchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. The Indenture also contains customary events of default.
The foregoing summary of the Indenture and the Secured Notes does not purport to be complete and is qualified in its entirety by reference to the full text of the Indenture and form of Senior Secured Note, which are attached as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above is incorporated into this Item 2.03 by reference.
Item 8.01 Other Events.
On May 15, 2020, NCLC issued a press release announcing the closing of the Secured Notes Offering on May 14, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
Cautionary Statement Concerning Forward-Looking Statements
Some of the statements, estimates or projections contained in this report 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 report, including, without limitation, those regarding our business strategy, financial position, results of operations, plans, prospects, actions taken or strategies being considered with respect to our liquidity position, valuation and appraisals of our assets and objectives of management for future operations (including those regarding expected fleet additions, our voluntary suspension, our ability to weather the impacts of the COVID-19 pandemic, operational position, demand for voyages, financing opportunities and extensions, and future cost mitigation and cash conservation efforts and efforts to reduce operating expenses and capital expenditures) are 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. Examples of these risks, uncertainties and other factors include, but are not limited to, the impact of:
| · | the spread of epidemics, pandemics and viral outbreaks, and specifically, COVID-19, on our financial condition and operations, which adversely affects our ability to obtain acceptable financing in an amount equal to the resulting reduction in cash from operations, and the current, and uncertain future, other impacts of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), which are expected to continue to adversely impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price; |
| · | our ability to develop strategies to enhance our health and safety protocols to adapt to the current pandemic environment’s unique challenges once operations resume and to otherwise safely resume our operations when conditions allow; |
| · | coordination and cooperation with the CDC, the federal government and global public health authorities to take precautions to protect the health, safety and security of guests, crew and the communities visited and the implementation of any such precautions; |
| · | the accuracy of any appraisals of our assets as a result of the impact of COVID-19 or otherwise; |
| · | our success in reducing operating expenses and capital expenditures and the impact of any such reductions; |
| · | our guests’ election to take cash refunds in lieu of future cruise credits or the continuation of any trends relating to such election; |
| · | trends in, or changes to, future bookings and our ability to take future reservations and receive deposits related thereto; |
| · | the unavailability of ports of call; |
| · | future increases in the price of, or major changes or reduction in, commercial airline services; |
| · | our ability to work with lenders and others or otherwise pursue options to defer or refinance our existing debt profile, near-term debt amortization, newbuild related payments and other obligations and to work with credit card processors to satisfy current or potential future demands for collateral on cash advanced from customers relating to future cruises; |
| · | adverse events impacting the security of travel, such as terrorist acts, armed conflict and threats thereof, acts of piracy, and other international events; |
| · | adverse incidents involving cruise ships; |
| · | adverse general economic and related factors, such as fluctuating or increasing levels of unemployment, underemployment and the volatility of fuel prices, declines in the securities and real estate markets, and perceptions of these conditions that decrease the level of disposable income of consumers or consumer confidence; |
| · | our potential future need for additional financing, which may not be available on favorable terms, or at all, and may be dilutive to existing shareholders; |
| · | any further impairment of our trademarks, trade names or goodwill; |
| · | breaches in data security or other disturbances to our information technology and other networks or our actual or perceived failure to comply with requirements regarding data privacy and protection; |
| · | changes in fuel prices and the type of fuel we are permitted to use and/or other cruise operating costs; |
| · | mechanical malfunctions and repairs, delays in our shipbuilding program, maintenance and refurbishments and the consolidation of qualified shipyard facilities; |
| · | the risks and increased costs associated with operating internationally; |
| · | fluctuations in foreign currency exchange rates; |
| · | overcapacity in key markets or globally; |
| · | our expansion into and investments in new markets; |
| · | our inability to obtain adequate insurance coverage; |
| · | our indebtedness and restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements; |
| · | pending or threatened litigation, investigations and enforcement actions; |
| · | volatility and disruptions in the global credit and financial markets, which may adversely affect our ability to borrow and could increase our counterparty credit risks, including those under our credit facilities, derivatives, contingent obligations, insurance contracts and new ship progress payment guarantees; |
| · | our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues; |
| · | our reliance on third parties to provide hotel management services for certain ships and certain other services; |
| · | our inability to keep pace with developments in technology; |
| · | changes involving the tax and environmental regulatory regimes in which we operate; and |
| · | other factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019. |
Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown.
The above examples are not exhaustive and new risks emerge from time to time. 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |
| 4.1 | Indenture, dated May 14, 2020, by and among NCL Corporation Ltd., as issuer, the guarantors party thereto and U.S. Bank National Association, as trustee, principal paying agent, transfer agent, registrar and security agent. | |
| 99.1 | Press Release of NCL Corporation Ltd., dated May 15, 2020. | |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Norwegian Cruise Line Holdings Ltd. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 15, 2020
| NORWEGIAN CRUISE LINE HOLDINGS LTD. | ||
| By: | /s/ Mark A. Kempa | |
| Name: | Mark A. Kempa | |
| Title: | Executive Vice President and Chief Financial Officer | |