Norwegian Cruise Line Issues $950 Million in 8.750% Notes Due 2031
Key Facts
NCL Corporation, a subsidiary of Norwegian Cruise Line Holdings, on October 15 closed an offering of $950 million in senior unsecured notes bearing annual interest of 8.750% and due in 2031, according to a company filing with the U.S. Securities and Exchange Commission. The company used the proceeds, together with available cash, to refinance existing obligations, not to build new ships as stated in an earlier account. The uses included redeeming all notes due in 2028, repaying about $376.3 million of revolving borrowings and about $42.2 million of credit-backed export financing. The offering adds debt due five years after the transaction, while the company rearranged its funding sources and repaid existing borrowings. The group disclosed details of the transaction as third-quarter results and its annual outlook highlighted improved earnings alongside a continuing debt burden.
Alongside the notes offering, an amendment dated October 15 increased lender commitments under the revolving facility from $2.486 billion to $2.801 billion and set its stated maturity at January 22, 2030, according to the same filing. The higher commitments give the company greater capacity to draw on the facility, while the transaction shifted part of its funding into notes due in 2031. On a pro forma basis that takes account of the debt issuance and the expanded facility, the company said liquidity as of September 30 would have been $2.1 billion, including $1.8 billion of availability under the revolving facility. That was a hypothetical estimate tied to completion of the two transactions, not the actual liquidity figure recorded at the end of September. The arrangement places the company’s financing in the context of managing maturities and providing resources for operations, with the new notes carrying an annual interest rate of 8.750%.
Third-quarter-end data showed the scale of the debt the company is managing: total debt was $15.1 billion and net debt was $14.8 billion as of September 30, while net leverage stood at 5.5 times, according to the group’s results. The figures show that the liquidity expansion and refinancing of some obligations came at a time of high leverage. Chief Financial Officer Mark Kempa said the company has no significant debt maturities until 2029, adding that existing financial resources and ongoing cash flows provide, in management’s view, a path to fund its transformation plan and strengthen the balance sheet. The maturities of the notes and amended facility spread funding across different due dates, while reducing debt remains a priority for the company. Kempa said: "There are no significant debt maturities until 2029, and we believe our existing financial resources and ongoing cash generation provide a clear path."
The refinancing followed a strong operating quarter, with third-quarter revenue of $2.9 billion and U.S. GAAP net income of $491 million, up from $419 million in the same period a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization totaled $937 million, exceeding the company’s guidance of $874 million, while adjusted earnings per share reached $1.12 against guidance of $0.90. The company said both metrics came in above the guidance range it had previously announced for the period. The results provide a backdrop to improved cash and operating performance that management said would support its plan, while the debt level shows that earnings growth has not ended the leverage challenge. In trading on October 29, the group’s shares rose 13.4% after it beat summer-season earnings and revenue expectations, according to the Associated Press.
The group raised its 2026 outlook to about $2.55 billion in adjusted earnings before interest, taxes, depreciation and amortization and about $1.70 in adjusted earnings per share. For 2027, it expects net yield growth of between 1% and 2%, with growth accelerating in the second half, according to the results statement. At the same time, the company said booking positions for the next twelve months had improved slightly since its last earnings announcement but remained below its optimal range. Management attributed support for demand and the booking curve to expanded offerings at Great Stirrup Cay, improved marketing and revenue management. The outlook sets out the expected performance path alongside ongoing efforts to strengthen the balance sheet, while management said financial resources and cash flows would support the transformation plan.