The company said it does not currently intend to use this facility. If drawn, it will convert into an unsecured 8% note maturing in April 2024.
The note would be guaranteed by certain NCLH subsidiaries.
Why secure more liquidity now?
Why secure more liquidity now, when the company is so close to positive cash flow and has no big debt maturities in the next two years?
During NCLH's third quarter earnings call, EVP/CFO Mark Kempa explained the thinking to analysts: As the company shifts to a more offensive approach to its balance sheet management, the facility provides a 'low cost but yet effective backstop rather than us having to go out and commit to permanent debt and/or permanent further dilution.
'It's a low-cost measure to have on the books that will allow us, independently, to start taking some balance sheet action and not have to worry about the broader picture,' Kempa said, reiterating: 'Our intention is not to draw on it.'
Staying ahead of the unknown
But in the event NCLH does need to draw on the facility, 'more than likely we would go out to the public markets and go after paper that is much more cost-effective.
'... We've seen what Delta does [the impact of the Delta variant on bookings],' Kempa added, 'and we want to be sure we're always in a position to be ahead of some of the unknown.'
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