Lindblad execs pleased with notes sale that garnered strong interest

By Devika Patel

Knoxville, Tenn., Feb. 22 – Lindblad Expeditions Holdings, Inc. management reported that the company’s recent $360 million sale of 6¾% senior secured notes due Feb. 15, 2027 was seven times subscribed, which showed investors’ confidence in its business plan.

On Feb. 4, the company issued the notes and used the proceeds to prepay in full all borrowings under its existing term loan, including the Main Street loan and revolving credit facility. Lindblad also entered into a new $45 million revolving credit facility, which remains undrawn and matures in February 2027.

“Following the quarter, we further strengthened our balance sheet with the refinancing of our existing term loan, including the Main Street facility as well as our revolving credit facility, through the issuance of 6¾% notes that mature in 2027,” chief financial officer Craig Felenstein said on the company’s fourth quarter and year ended Dec. 31, 2021 earnings conference call on Tuesday.

“The issuance was over seven times subscribed, which speaks to the attractiveness of our business model and the earnings power of the business model coming out of the pandemic.

“This issuance, along with the new, undrawn $45 million revolving credit facility, also maturing in 2027, provides us additional financial flexibility as we further grow the company,” Felenstein said.

Management was pleased with the sale.

“In Q4, we were very pleased regarding the issuance of our senior secured notes, which will provide additional financial flexibility for the company,” chief executive officer Dolf Berle said on the call.

Last year was challenging, largely due to the pandemic, but the company used the time when operations were shut down to reduce costs, manage the balance sheet and position itself for when operations resumed.

“2021 was a year that was defined in great part by the effects of the pandemic,” Berle said.

“The initial phases of Covid shut down our operations back in March of 2020, and it was June of 2021 when we began to resume sailing.

“While we were non-operational, we focused on taking the necessary steps to reduce costs, fortify our balance sheet and right-size our cost structure, working to position ourselves for success upon the restart of operations.

“Once we resumed operations, last summer was a time of resurgence.

“However, the business then became more challenging again, first from the Delta variant and then when the Omicron variant swept across the world in the winter months,” Berle said.

The company’s financial position will take some time to recover from Omicron, but it has plenty of liquidity to handle potential uncertainties.

“Due in large part to the short-term impact from the Omicron variant, it will still take some time to fully return to financial levels we were generating when we paused operations, but we have ample liquidity to further ramp up operations and weather any immediate uncertainties that may arise,” Felenstein said.

“More importantly, the investments we have made during the pandemic to expand our fleet capacity and diversify our product offerings has significantly increased our earnings potential from pre-pandemic levels and will enable us to further capitalize on the growing demand for authentic adventure travel,” Felenstein said.

Lindblad is seeing an increase in bookings for future travel, despite some cancellations due to Omicron, and management believes there is significant pent-up demand for travel.

“We continue to see significant reservations for future travel,” Felenstein said.

“Bookings have grown week-over-week nearly every week since the end of December and, while we did see a ratchet up in cancellations for the fourth quarter of 2021 and the first half of 2022 due to the Omicron variant, the majority of those guests have rebooked for future travel.

“There’s no question that there is significant pent-up demand to get out and explore the world’s amazing geographies and we are primed to take further advantage of this trend,” Felenstein said.

Cash and cash equivalents were $150,753,000 as of Dec. 31, 2021, compared to $187,531,000 as of Dec. 31, 2020.

Long-term debt, less current portion, was $518,658,000 as of Dec. 31, 2021, compared to $471,359,000 as of Dec. 31, 2020.

Current portion of long-term debt was $26,061,000 as of Dec. 31, 2021, compared to $11,255,000 as of Dec. 31, 2020.

As of Dec. 31, 2021, the company had a total debt position of $558.5 million and was in compliance with all of its debt covenants.

On Jan. 21, Lindblad Expeditions, LLC priced an upsized $360 million of 6¾% five-year secured notes (B3/B-) at par on accelerated timing. The deal settled on Feb. 4.

The deal was initially announced at $340 million.

Citigroup Global Markets Inc. was the left bookrunner. Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC were joint bookrunners.

The Rule 144A and Regulation S for life notes become callable after two years at par plus 50% of the coupon. They feature a 40% equity clawback at par plus the full coupon during the non-call period and have a 101% poison put.

The New York-based provider of expedition cruises and adventure travel experiences earmarked the proceeds to refinance its senior secured term loan and the drawn amount under its revolver.

© 2015 Prospect News.
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