Norwegian Cruise flags cash crunch, going concern risks

Norwegian Cruise Line Holdings Ltd, the world’s third-largest cruise operator, warned of a cash crunch and raised doubts about its ability to keep running its business, making it the first in the sector to signal it may succumb to the coronavirus crisis.

The company’s shares slumped about 9% before the opening bell on Tuesday as it launched a $1.6 billion offering of shares and bonds in a scramble to raise money.

Cruise operators including Norwegian Cruise and rivals Carnival Corp and Royal Caribbean Cruises have been among the worst hit, as their ships remain docked at ports and the crisis brings global travel to a virtual standstill.

“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 to fund resulting reductions in cash from operations,” Norwegian Cruise Line said.

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

It has already warned of a quarterly loss, withdrawn its forecast and suspended all voyages through the end of June due to the crisis.

The company has hired investment bank Goldman Sachs to explore financing options that could include the sale of a stake in the company, Reuters reported last month.