Norwegian to repay highest-cost debt, $250 million 9¾% notes due 2028

By Devika Patel

Knoxville, Tenn., Feb. 28 – Norwegian Cruise Line Holdings Ltd. expects to refinance its $650 million backstop commitment from a secured to unsecured commitment in early March and, as part of this refinancing, the company plans to repay its $250 million 9¾% senior secured notes due 2028, Norwegian’s highest interest rate debt.

This, along with planned de-levering in 2024, 2025 and 2026, is expected to drastically improve the balance sheet.

The company repaid $1.9 billion of debt in 2023, including its $875 million revolving loan facility.

“We repaid $1.9 billion of debt, including the full paydown of our $875 million revolving loan facility [in 2023],” executive vice president and chief financial officer Mark A. Kempa said on the company’s fourth quarter and year ended Dec. 31, 2023 earnings conference call on Tuesday.

“Most recently, we successfully negotiated a refinancing of our $650 million backstop commitment from a secured to an unsecured basis and, in connection with this refinancing, $250 million 9¾% secured notes due in 2028, our highest interest rate debt, is expected to be repaid.

“This refinancing, which is expected to close in early March, will reduce interest expense [and] improve leverage, while also releasing all of the related collateral,” Kempa said.

The company is committed to prioritizing efforts to optimize its balance sheet and reduce leverage.

“Another important step forward in improving our balance sheet,” Kempa said.

“The company has a solid track record of de-levering the balance sheet.

“From 2014 to 2019, we successfully de-levered by over three turns.

“We will continue to be opportunistic and look for further ways to strengthen our balance sheet.

“We are confident we can make meaningful progress on this front going forward.

“Over the course of 2024, we expect to reduce our reported leverage by almost one and a half turns with sequential improvements in each quarter,” Kempa said.

“This year, you will see significant improvements in leverage and we’re excited to see that same thing happening over the course of 2025 and 2026.

“This improvement does not assume any prepayment of debt, apart from the aforementioned takeout of our $250 million notes expected in early March.

“Going forward, we are refining a multiyear plan to further accelerate the reduction of leverage and derisk our balance sheet,” Kempa said.

“We generated $1.9 billion in adjusted EBITDA in 2023, allowing us to generate the adjusted free cash flow to further strengthen our balance sheet with the repayment of nearly $2 billion in debt,” president and chief executive officer Harry J. Sommer said on the call.

“We will continue to improve our balance sheet and reduce leverage over time,” Sommer said.

Adjusted free cash flow was $1.1 billion for 2023.

Total revenue for the year was $8.5 billion, a 32% increase compared to 2019.

Adjusted EBITDA for 2023 was $1.861 billion.

At year-end, liquidity was $2.3 billion, including $402,415,000 of cash and cash equivalents (compared to $946,987,000 of cash and cash equivalents a year ago), $1.2 billion of availability under Norwegian’s revolving loan facility and a $650 million undrawn backstop commitment.

As of Dec. 31, 2023, the company had total debt of $14.1 billion, total net debt of $13.7 billion and long-term debt of $12,314,147,000, compared to $12,630,402,000 of long-term debt as of Dec. 31, 2022.

Norwegian is a Miami-based cruise company.

© 2015 Prospect News.
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