Cash-strapped Norwegian Cruise flags going concern risks

Norwegian Cruise Line Holdings Ltd cruise ship Jewel seen anchored in the Pacific Ocean in this aerial photograph taken above Long Beach, California.

BENGALURU (Reuters) - Norwegian Cruise Line Holdings Ltd, the world's third-largest cruise operator, raised doubts about its ability to keep running as a business on Tuesday, the first in the sector to signal it may succumb to the coronavirus crisis.

The company's shares slumped about 14% in early trading on Tuesday as it also launched a US$1.6 billion offering of shares and bonds in a scramble to raise money.

The company also announced a US$400 million investment from a private equity firm.

Norwegian Cruise and rivals Carnival Corp and Royal Caribbean Cruises have been among the most high-profile victims of the pandemic after deadly outbreaks on some cruise ships led to extended port quarantines in Japan and California.

The industry was left out of a US$2.3 trillion US stimulus package for troubled companies as the major players are all incorporated outside the United states.

"COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which adversely affects our ability to obtain acceptable financing," Norwegian Cruise Line said.

Its cruises including Norwegian Bliss and Breakaway sail to several locations including the Caribbean, the Mediterranean, and the Bahamas.

The company's shares have lost almost 80% of their market value this year as its 28-ship fleet remains docked at ports.

The Miami-headquartered company said it does not have sufficient liquidity to meet its obligations over the next twelve months.

Since the start of the crisis, the company has borrowed US$1.55 billion under credit facilities.

At the end of last year, it had about US$6 billion of total long-term debt obligations and cash and cash equivalents of US$252.9 million.

The company said it may need additional financing to fund its operations but may not be able to obtain them amid "going concern" doubts.

It had earlier warned of a quarterly loss, withdrawn its forecast and suspended all voyages through the end of June.

A subsidiary of Norwegian Cruise also got a US$400 million investment from consumer-focused private equity firm L Catterton on Tuesday.

It had been in talks with several private equity firms for a PIPE deal (private investment in public equity).

Several companies have turned to PIPE deals in recent weeks to bolster their finances, including car e-commerce platform Carvana Co, payment firm EVO Payments Inc, and online real estate broker Redfin Corp.

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