NCL Corporation Ltd (”NCL”), parent company of Norwegian Cruise Line and NCL America, announced today that private equity group, Apollo Management, LP (”Apollo”), has agreed to make a $1 billion cash equity investment in NCL.
The new investment, in the form of common stock alongside NCL’s existing sole shareholder, Star Cruises (”Star”), is designed to strengthen NCL’s balance sheet and its ability to continue to expand what is fast-becoming the youngest fleet in the industry, and to evolve further the company’s successful Freestyle Cruising concept first introduced in 2000.
Under the terms of the proposed investment, which includes an agreement for additional future distributions to be made directly by NCL to Star, Apollo will become 50 percent owner of NCL and will name a majority of the NCL board with certain consent rights retained by Star. Star will retain all of its existing stock in NCL and will, like Apollo, be 50 percent owner of the recapitalized company.Star Cruises Chairman and CEO Tan Sri KT Lim, welcomed the new partner and remarked on the opportunities that lie ahead: “Apollo’s significant financial commitment in NCL’s common stock means we have an equal partner who believes in the business as much as we do. This is a powerful validation of what we have achieved so far and of our vision for the future. It is also truly the start of the next - and most exciting - chapter for this great company.”
The proceeds of the Apollo investment will be used to repay existing NCL indebtedness, greatly increasing the liquidity available to fund a continuation of the dramatic new building program that has seen the introduction of eight purpose-built Freestyle Cruising ships to the fleet in just six years. The NCL-owned fleet today (excluding four chartered ships) stands at 19,740 berths, with another 15,000 berths under construction and under option, including the new Norwegian Gem due for delivery at the start of October this year.
As part of Apollo’s investment in NCL, Apollo and Star have entered into a sub- agreement relating to NCL’s U.S. flagged Hawai`i operations under the NCL America brand (”NCLA”) providing for deferred consideration to be paid to Star by NCL in the future. The sub-agreement is designed to support the business of NCLA in the near term and permit NCLA time to realize the benefits of various measures recently implemented to raise revenue yields and to lower crew turnover and payroll costs. Taken together with the pre-money valuation implied by Apollo’s $1 billion payment for 50 percent of the expanded equity, this added element of the transaction implies a total enterprise valuation of NCL of approximately $4 billion.
Completion of the transaction is expected early in Q4 2007 and is subject to customary conditions, including regulatory approval, Star Cruises shareholder approval, and Star and NCL lender consents.
The completion of the transaction will constitute a change of control under NCL’s outstanding 10 5/8% senior notes and NCL expects to make a change of control offer at 101% after completion as required under the indenture governing the notes.
Filed under: NCL America, Norwegian Cruise Line
Leave a Comment
Markdown is available. Some examples:
>Quote text
_italics_
**bold text**
[example link](http://example.com/)
Code of Comment Conduct
All comments are moderated until you have a comment approved unless:
- You post 2 or more links in your comment OR
- You are a spammer/bad guy/alien here to pollute the comments
- Play nice! Please.
Thank you
