Time for NCLH financial-related posts?

[Bellaggio Cruisers]

15 minutes ago, CBWIR said:

The only way they could issue a Prospectus was with this language. We'll see who is right. And if they raise the funds, PWC will remove the going concern opinion.

What is PWC?

sheila

[howiefrommd]

7 hours ago, Pcardad said:

Today the Company has launched a series of capital markets transactions, led by Goldman Sachs, which are expected to raise approximately $2 billion. These transactions are expected to consist of 1) $350 million public offering of common equity, 2) $650 million exchangeable senior notes offering, 3) $600 million senior secured notes offering and 4) $400 million private placement from global consumer-focused private equity firm L Catterton.

Contingent on completion of the transactions, the Company expects to have approximately $3 billion of liquidity. This strengthens the Company’s financial position and ensures it is well positioned to withstand well over 12 months of voyage suspensions in a potential downside scenario. While this is not the Company’s base case expectation, the Company has taken a proactive approach to protect its future given the significant uncertainty and unknown duration of the COVID-19 global pandemic. 

 

Just got this in my email.

I'll bet this came out from marketing not their general counsel or financial people.

[bissel]

Somebody pretty knowledgeable wrote me that securities laws and regulations that impose criminal sanctions on executives for incorrectly certifying financial statements and MD &A make this “going concern” disclosure completely expected. It would be almost illegal for them not to make that statement.

This seems to agree with CBWIR and a few others opinions. I’ll go with that!

[Pcardad]

It was mailed out by many different people in the company but, IMO, I can't imagine something like this was released without both of those departments signing off on it.

[greykitty]

14 minutes ago, Bellaggio Cruisers said:

What is PWC?

sheila

PricewaterhouseCoopers, their external auditor, and a member of the Big 4.  Again, IMO, going concern or reissuances of opinions are not lightly decided upon.

 

 

Edited May 5, 2020 by greykitty

[howiefrommd]

1 minute ago, Pcardad said:

It was mailed out by many different people in the company but, IMO, I can't imagine something like this was released without both of those departments signing off on it.

There is world of difference within the legal community as to who releases this information.  

 

[greykitty]

2 minutes ago, bissel said:

Somebody pretty knowledgeable wrote me that securities laws and regulations that impose criminal sanctions on executives for incorrectly certifying financial statements and MD &A make this “going concern” disclosure completely expected. It would be almost illegal for them not to make that statement.

This seems to agree with CBWIR and a few others opinions. I’ll go with that!

Oh, IMO, I expect PwC had a number of conversations with the C suite over the last few weeks.  But, yes, fibbing to the SEC is a very very bad thing.  

[bissel]

Grey kitty, so you are agreeing that it was necessary for NCLH to acknowledge this? It would seem pretty obvious anyway. You are very knowledgeable and I appreciate this discussion amongst those who are. ( this is not my field but I am trying to educate myself as I do have a big paid up refund coming.)

[Pcardad]

Opinion but I believe 100% that is was NCLH who started the disclosure process because it was required by law (regulation) when pursuing the fundraising options they have obviously been pursuing for some time.

[greykitty]

5 minutes ago, bissel said:

Grey kitty, so you are agreeing that it was necessary for NCLH to acknowledge this? It would seem pretty obvious anyway. You are very knowledgeable and I appreciate this discussion amongst those who are. ( this is not my field but I am trying to educate myself as I do have a big paid up refund coming.)

IMO, absolutely it was a necessary disclosure or else run afoul of the SEC, based on their financial statements and expectations. Not boilerplate, not just routine verbiage.  But, just me.   And, if people think the CDC is tough - oh, boy, the SEC. LOL

[bissel]

A few think ultimately the extra billions will be raised. I’ll go with that because .. well, that would be best for everybody! And what else can we really do?

[greykitty]

Pcardad, I think you'd agree that SEC filings can be required both in respect to stock offerings, and in recognition of a material change in financial reporting and/or going concern issues.  In any event, NCLH does have regulatory requirements as a publically held company that it simply must adhere to.  It's not a voluntary exercise on their part, although I don't think you're implying that.

 

It's going to be,again, interesting watching the SEC filings going forward....although, if they suddenly swap external auditors I'll be very very curious as to what's up.

[Pcardad]

Agree. Disclosure was required because of their stated financial plan. This is a fact.

 

I think it is opinion that they would have had to disclose no matter what. There are a lot of publicly traded companies filing for bankruptcy without disclosing...evidenced by the surprise generated by the filings.

 

I think the voluntary part is that it was their choice to finance their survival this way and this method required a new disclosure.

 

I also think that this isn't the end of this story...

[Pcardad]

PS - if they suddenly swap external auditors I will take that as huge sign of very bad news...and will act accordingly. Looks like we agree again. 😃 

[CBWIR]

14 minutes ago, greykitty said:

Pcardad, I think you'd agree that SEC filings can be required both in respect to stock offerings, and in recognition of a material change in financial reporting and/or going concern issues.  In any event, NCLH does have regulatory requirements as a publically held company that it simply must adhere to.  It's not a voluntary exercise on their part, although I don't think you're implying that.

 

It's going to be,again, interesting watching the SEC filings going forward....although, if they suddenly swap external auditors I'll be very very curious as to what's up.

Promise me an apology if the financing gets done?

[greykitty]

Oh, I never said they have no chance whatsoever of arranging for financing - just that the very words going concern tend to make a lot of investors very very nervous.   

 

Now, that financing might not be a very favorable terms, but sometimes you just gotta do what you gotta do.

 

But, yeah, it's going to be odd if that private equity arrangement doesn't go through - usually everyone tries to get their ducks in a row first.  But, odd times to be sure these days.....

[RJ2002]

Good discussion here.  Thanks to all the recent posters.

[Host Jazzbeau]

I don't recall CCL issuing language like this before their recent re-financing – but was that a private deal, so they didn't need a prospectus?

[CBWIR]

4 minutes ago, Host Jazzbeau said:

I don't recall CCL issuing language like this before their recent re-financing – but was that a private deal, so they didn't need a prospectus?

Yes.

[Shippy]

 I am sorry to impose on all of you....

   I know this discussion is very important but sadly over my head.

Simply put.....

we have a cruise on Regent booked for May 2021

No chance of a refund as we booked with FCC

I do not care if the cruise is cancelled because our credit just goes forward but...

do you think there is a chance of the company going bankrupt meaning we would lose it all....

thank you all for your opinions

[JMARINER]

3 minutes ago, Shippy said:

.....

do you think there is a chance of the company going bankrupt meaning we would lose it all....

thank you all for your opinions

"Lose it all?" Not necessarily. Depends on the type of bankruptcy that might be declared. Even then, if a new "reorganized" company emerges, that company can choose to honor past commitments such as future cruise credits (all or partial) or past passenger  (SSS) benefits as incentives to keep loyal customers. But if the company goes completely under then all bets are off.

 

No one can no for sure. And that that it matters much, but your not alone in your concerns.

 

J

[toseaornottosea]

From Wikipedia: Norwegian Cruise Line Holdings (NCLH) is a holding company that is domiciled in Bermuda and based in the United States. It operates three cruise lines as wholly owned subsidiaries: Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises. With its subsidiaries combined, it is the third-largest cruise operator in the world. It is a publicly traded company listed on the New York Stock Exchange.

 

No one wants bankruptcy but if it should occur, how does the fact that it's home country is Bermuda but it's stock is traded on the New York Stock Exchange and must adhere to SEC rules impact the bankruptcy proceedings? 

[mrlevin]

1 hour ago, greykitty said:

PricewaterhouseCoopers, their external auditor, and a member of the Big 4.  Again, IMO, going concern or reissuances of opinions are not lightly decided upon.

 

 

 

Off topic - What ever happened to Lybrand?  I still remember the Big 8 and then the little 8 with Grant Thornton as 9.

[greykitty]

4 minutes ago, mrlevin said:

 

Off topic - What ever happened to Lybrand?  I still remember the Big 8 and then the little 8 with Grant Thornton as 9.

Coopers & Lybrand?  Ended up as PricewaterhouseCoopers. When I started it was the Big 8.  Those were the days LOL

 

Still remember the whole AA thing.  I still wonder if AA's chair had not disputed the feds and just resigned, maybe even going outside for a new chair and promises of reform, if AA would still exist.  Yep, I know there's still an Andersen, but it's not the same to me.

[orvil]

5 hours ago, CruiserFromMaine said:

I’m putting my recently retired auditor hat on...

 

It’s a big deal for a public company to re-issue December financial statements, especially to add a going concern footnote and auditor’s opinion. While the company may expect to raise $2 billion dollars, there wasn’t enough certainty of success on that front or on other cited plans to avoid the auditor’s going concern opinion. A going concern opinion essentially means that there is lots of worry (“substantial doubt”) about the company being a viable business a year from when the report is issued. 
 

Obviously, getting another $1.6 billion would make a huge difference.

 

I will be interested to see if other companies, cruise lines or not, re-issue their December financial statements similarly. 
 

For those of us awaiting refunds, I get some comfort from this disclosure: The Company also has agreements with its credit card processors that govern approximately $1.6 billion at December 31, 2019 in advance ticket sales that have been received by the Company relating to future voyages. These agreements allow the credit card processors to require under certain circumstances, including the existence of a material adverse change, excessive chargebacks and other triggering events, that the Company maintain a reserve which could be satisfied by posting collateral. The Company is in discussions regarding the nature of collateral, if any, relating to these agreements.
 

It makes sense that the credit card companies don’t want to be on the hook for a merchant’s financial difficulties. 

 

I wondered how much their future sales liabilities were.  $1.6 billion.  From what I have read, 50% have taken the rebooking deal and FCC.  The other 50% have requested refunds.  That means they need to refund $800 million in the space of a few weeks.  Now you know why the refund period was so long at 90 days.  They needed to arrange financing to deal with this amount and no money coming in to offset this sum.  Ouch.

 

My guess is there will be additional updating of financial statements elsewhere in the industry, too.  To not update the financial situation could expose management to criminal liability under US securities laws.  Managers don't take that requirement lightly.

 

I was admonished on this forum for suggesting that the credit card companies would have enormous influence in any Chapter 11 proceedings.  I was also chastised for suggesting that disputing the length of time, 90 days, to refund was excessive and it should be disputed with your credit card company if you wanted a refund.  For those that rolled the bones and took the rebooking and FCC credit, I hope your gamble pays off.  Nothing would make me happier than seeing your cruise blogs and great pictures.

 

Unfortunately, I have been proven correct.  I'm sorry that it's the situation.  It will give many people, employees and customers some sleepless nights through no fault of their own.  Management will be fine.  I won't give them a moments thought.  They will move on to the next iteration.  It will be much harder before it gets better for the line employees.  That's a shame.