In the first of two parts of a wide-ranging interview with
Travel Weekly editor in chief Arnie Weissmann, Norwegian Cruise Line Holdings
CEO Frank Del Rio gave the back story on closing a $2.4 billion round in tough
times. Part 2: Del Rio on relaunching and the importance of travel advisors in
On March 13, Norwegian Cruise Line Holdings CEO Frank Del
Rio learned that to stem the spread of Covid-19 on cruise ships, the Centers
for Disease Control and Prevention (CDC) had issued a no-sail order,
effectively halting cruising out of U.S. ports.
No cruising, no revenue. No revenue, no assurance of the
liquidity needed to survive for an unknowable amount of time. “I knew our world
was going to change,” Del Rio told Travel Weekly in an interview on Thursday.
Del Rio sees the journey from potential ruin to bountiful
liquidity as testimony to the resiliency of cruising and NCLH’s unique position
in the cruising ecosystem.
On Wednesday, Del Rio finished what would be considered a
remarkable round of funding even during the best of times. His underwriter,
Goldman Sachs, told him it was the first simultaneous “quad” it had seen:
releasing a private placement memorandum and at the same time announcing three
different kinds of public capital. And, as icing on the cake of the $2.23
billion initially announced, an oversubscription in each tranche triggered what
Wall Street calls a “greenshoe” event, allowing additional shares to be sold, bringing
the total above $2.4 billion.
What should have been an unqualified grand slam was
temporarily dampened when some investors and media noticed two sentences in a
59-page public filing on Tuesday which seemed to disclose “substantial doubt”
about the company’s ability to continue “as a going concern,” and another
warning that, should investment not be forthcoming, “it may be necessary for us
to reorganize our company in its entirety, including through bankruptcy
The language, Del Rio said, was a “mandatory, technical
accounting reporting requirement that our auditor, Price Waterhouse, was
required to issue in conjunction with the offering memorandum.” Though the
details the following day about the success of the offering would render the
point moot, NCL stock dropped 22% the day before the full scope of the
investments were announced.
The $2.4 billion, combined with $1.1 billion in cash the
company already had, “probably gives us the biggest liquidity cushion — the
longest runway — of any company in the cruise space,” Del Rio said. “I
challenge you to find another company in any industry that can say that they
can withstand a 100% cessation of operations with zero revenue for more than 18
When this is all over, Del Rio asserts, “Norwegian will be
one of the survivors, one of the success stories. This was truly a team effort.
Yesterday I addressed them all, and it was a very emotional moment because what
was being saved was a great institution. We invented the cruise industry more
than 50 years ago and I would be damned if, under my watch, that was going to
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