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How Goldman Sachs Is Helping Norwegian Cruise Lines Stay Afloat

Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) stock saw a handy gain on Wednesday after the company announced that it had secured more liquidity to help keep the cruise line operator from going under.

According to the company, it has secured over $2 billion of additional liquidity in response to the impact of the global COVID-19 pandemic. This liquidity is meant to help due to the temporary suspension of voyages and to safeguard against a further downside scenario.

Keep in mind that this company has a market cap of roughly $2.5 billion.

Norwegian is launching a series of capital markets transactions, led by Goldman Sachs, to raise approximately $2 billion. The transaction has since been upsized to gross proceeds of $2.225 billion ($2.4 billion if the underwriters exercise their full overallotment options) due to significant oversubscription and demand across all three offerings.

The transactions consisted of a $400 million public offering of common equity, a $750 million exchangeable senior notes offering, a $675 million senior secured notes offering and a $400 million private investment from global consumer-focused private equity firm L Catterton.

Contingent on completion of the transactions, Norwegian expects to have about $3.5 billion of liquidity. This significantly strengthens the company’s financial position and liquidity runway, and it now expects to be 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, management believes that it has taken a swift and proactive approach to protect its future, given the significant uncertainty and unknown duration of the pandemic. When the transactions are completed, the additional liquidity alleviates management’s concern about the company’s ability to continue as a going concern for the next 12 months.

Norwegian Cruise Line stock traded up about 2% to $11.41 on Wednesday, in a 52-week range of $7.03 to $59.78. The consensus price target is $30.54.