NCL and RCL win debt holiday on German-built ships

2020-04-27T08:38:53+00:00 April 27th, 2020|Finance|

Beginning on 20th April, 2020, NCL Corp, (NCLC), a subsidiary of Norwegian Cruise Line Holdings (NCLH), amended the export-credit backed facilities that finance six German-built cruise ships.

The vessels involved are the ‘Norwegian Bliss’, ‘Norwegian Breakaway’, ‘Norwegian Encore’, ‘Norwegian Escape’, ‘Norwegian Getaway’ and ‘Norwegian Joy’.

According to a stock exchange filing, the facilities were amended to incorporate the terms of a 12-month debt holiday offered to the cruise industry by Euler Hermes AG (Hermes), the German official export credit agency.

This debt deferral was initiated to provide interim debt service and financial covenant relief for borrowers during the current global COVID-19 pandemic with respect to their Hermes guaranteed financings.

These amendments to the debt holiday provide around $386 mill of incremental liquidity to NCLC through April, 2021.

In a similar move, a day later, Royal Caribbean announced in a filing that it had amended the export-credit backed loan facility incurred to finance ‘Quantum of the Seas’, to incorporate the same benefits.

Under the terms of the amendment, the lenders have made available a new tranche of the loan, the proceeds of which will be used to repay any principal amortisation payments, due on the facility between 1st April, 2020 and 31st March, 2021.

These payments will be due in eight equal semi-annual instalments between April, 2021 and October, 2024. Interest will accrue at the same floating rate that applies to the existing loan (LIBOR plus 1.3% per annum). Interest is payable during the period.

The lenders have also agreed that, during the debt holiday period, a breach of the financial covenants will not trigger a mandatory pre-payment under the facility.

In addition to this amendment, between 15th April, 2020 and 23rd April, 2020, RCL also amended the export-credit backed loan facilities incurred to finance ‘Celebrity Eclipse’, ‘Celebrity Equinox’, ‘Celebrity Solstice’ and ‘Celebrity Silhouette’ in order to incorporate the benefits of the debt holiday.

Across the ‘Quantum’ facility and these four facilities, the debt holiday amendments will generate about $250 mill of incremental liquidity through April, 2021. This is in addition to the previous $200 mill of incremental liquidity realised in connection with the implementation of a debt holiday across other Hermes-backed facilities, the filing said.