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Norwegian charts course to lower leverage; 75% of debt is fixed-rate
By Devika Patel
Knoxville, Tenn., Nov. 9 – Norwegian Cruise Line Holdings Ltd. management is working to increase cash flow by rightsizing its operations and will then use that cash flow to de-lever below 4x.
A large portion of the company’s debt has a fixed-rate coupon, and 80% of its debt is expected to be fixed-rate by the end of next year.
“We are charting a path back to success and, first and foremost, that means rightsizing the business, getting the business back to full operating capacity, which is just around the corner,” executive vice president and chief financial officer Mark A. Kempa said on the Miami-based cruise company’s third quarter ended Sept. 30 earnings conference call on Tuesday.
“That’s going to result in significant cash flow and that results in de-levering and de-risking the balance sheet.
“We need to de-lever this company.
“We’ve done it before.
“We’ve taken the company down from 9x, 10x levered to where we were in the end of 2019, at low 3s going into the 2s, so, as we look forward, we want to finish fiscal year 2023 with a 5x handle in leverage and, then, our goal in 2024 is a 4x handle and then 3x handle,” he said.
Management is pleased with the company’s maturity profile and expects its total debt portfolio to be 80% fixed-rate by year-end 2023.
“We expect to have a relatively smooth maturity profile over the course of the next few years,” Kempa said.
“Our total debt portfolio is approximately 75% fixed rate today, and this is expected to increase to approximately 80% by year-end 2023,” he said.
As of Sept. 30, the company’s total debt position was $13.9 billion and its liquidity was approximately $2.2 billion, consisting of cash and cash equivalents of $1.2 billion and a $1 billion undrawn commitment.
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