Due to the worldwide pandemic associated with the spread of COVID-19, business is undergoing severe decline. Thus, the Norwegian cruise line Cruise Line was forced to borrow $ 2.2 billion in order to stay afloat and not lose everything in the resulting world conditions. Since all cruises were canceled due to the threat of a pandemic, the company had to return the money to clients, which significantly affected their financial situation. Additional expenses are also required by motor ships and employees who are temporarily on land. The company had to borrow two ships and two islands.
According to the Financial Times, the company attracts not only bank loans, but also investment funds. Thus, L Catterton, through its subsidiary NCL, invested $ 400 million in a near-sunken ship, thereby earning the right to a seat on the board of directors.
The main problem in this period of time is the uncertainty of the future situation and actions. The cruise line said that most of the customers who booked and paid for a cruise in 2021 had abandoned their 2021 cruise confirmation certificates and instead demanded a full refund, which also negatively affected the Cruise Line's position. Cruises are now canceled until June 30, while the US Centers for Disease Control banned cruises through July 24. The company finds it difficult to answer when it will actually be able to start full-fledged work, since the information is updated daily, which further complicates the situation.
Cruise Line admits that there may be a worst-case scenario in which the company will not be able to pay off loans and investments, which could lead to complete collapse and bankruptcy. In such a case, shareholders can also lose all of their investments.
The market reacted negatively to this news: the shares of the Norwegian company fell sharply by 23%. Since the beginning of the year, their price has already dropped by 80%.
