Norwegian Cruise Lines Filing Shows `Going Concern' Risk

Norwegian Cruise Lines said in an SEC filing that it did not have enough liquidity to meet its obligations over the next 12 months.
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Shares of Norwegian Cruise Lines  (NCLH) - Get Report on Tuesday fell after a company filing with the Securities and Exchange Commission indicated doubt that it would be able to continue as a going concern. 

The Miami company said that as of the end of 2019, the company had long-term debt obligations totaling $6 billion. And it has borrowed the full amount of $1.55 billion from its revolving credit facility.

"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," the company said in Tuesday's Form 8-K filing. 

In March, Moody's downgraded Norwegian's long-term issuer and senior unsecured debt ratings to Ba2 from Ba1. In April, S&P Global downgraded the issuer rating to BB- from BB+. 

The company has voluntarily suspended all cruise voyages across three brands since March, with plans to extend the closures through June 30. Those closures will be extended through July 24 due to the Centers for Disease Control and Prevention's order. 

Norwegian Cruise said it did not have enough liquidity to meet its obligations over the next 12 months, calling into doubt whether it can "continue as a going concern."

Despite those issues, Norwegian says it has been evaluating different "financing transactions that, if successful, would provide net proceeds" sufficient to provide the liquidity it needs to pay its obligations over the next 12 months. 

Norwegian shares at last check were 10% lower at $13.