BELIZE CITY, Tues. May 5, 2020– The COVID-19 pandemic has devastated the global economy, leaving hundreds of millions unemployed.
In Belize, the tourism industry, a key economic engine driving the country’s economy, has been shattered, displacing an estimated 20-odd thousand workers.
More grim news for Belize’s tourism industry emerged today when Norwegian Cruise Lines (NCL) filed papers at the US Securities and Exchange Commission (SEC), indicating that the cruise company may have to seek Chapter 11 bankruptcy protection if it fails to attract new investor capital from several initiatives on the drawing board.
The Miami-based tour company’s filing with the SEC today sent investors scrambling to sell off tour companies stocks. By the end of the trading day, NCL stocks had dropped off 22 percent. Its competitors, Carnival Cruise Lines and Royal Caribbean, also experienced sell-offs of their stocks, which dipped 8.7% and 10.1% respectively.
NCL’s stocks have been on a downward trajectory since last December, when it was selling for $60. At the close of the trading day on the New York Stock Exchange, NCL shares were fetching a mere $11.
The news of NCL’s financial woes will also impact the company’s operations at Harvest Caye, in southern Belize.
Norwegian Cruise Lines announced a series of transactions that could boost the company’s liquidity position by as much as $3 billion in order for it to stay afloat.
Among the maneuvers Norwegian is undertaking is the selling of two of its cruise ships and two of its island possessions, Harvest Caye in Belize and Great Stirrup Island in the Bahamas. The sale could reportedly yield some $2 billion for NCL.
NCL said in its “current report” filing this morning with the United States SEC that there is “substantial doubt” about its ability to continue operations, given that without additional financing, the company “does not have sufficient liquidity to meet its obligations over the next twelve months.”
NCL indicated that all of its obligations have been met up to March 31. The company, however, said that if it is unable to amend its credit or get waivers, it may be forced to default and will need bankruptcy protection.
Apart from the sale of its assets, NCL is looking at other options to continue in business in the post COVID-19 world. The company reportedly has access to $400 million from its subsidiary, NCL Corp, through the private equity fund L Catterton.
Norwegian CEO Frank Del Rio is quoted as saying, “We are pleased to execute this agreement with L Catterton, the largest and most global consumer-focused private equity firm in the world.”
NCL is also planning to raise another $350 million through a public offer of ordinary shares.
The L Catterton investment will only materialize if the company can raise one billion dollars from other investors.
In its filing, NCL says it has had significant costs and losses, not only due to lost bookings, but also as a result of having to return passengers and certain crew members to their home destinations and assist crew members unable to return home, with food and housing.
Additionally, since March 12, the company has faced three class action lawsuits based on claims that it made false and misleading statements to the market and customers about COVID-19. Attorney generals in several US states subsequently launched investigations into the company’s marketing during the COVID-19 outbreak.
As part of its cost-cutting measures, NCL on April 29 informed its workforce that approximately 20% of its shore-side employees will be furloughed —that is, laid off temporarily until July 31. Those who stay on the job face shortened work weeks and reduced hours.
In April, S&P Global downgraded NCL’s credit rating from BB+ to BB-. At the end of December 2019, the company had approximately US $6 billion in long-term debt.