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Item 1.01
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Entry into a Material Definitive Agreement.
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Background
As previously disclosed,
on May 5, 2020, Norwegian Cruise Line Holdings Ltd. (the “Company”) and
NCL Corporation Ltd. (“NCLC”), a subsidiary of the Company, entered into
an investment agreement (the “Investment Agreement”) with an affiliate of L Catterton (the “Investor”),
relating to the issuance and sale of $400 million in aggregate principal amount of NCLC’s exchangeable senior notes due 2026
(the “Private Exchangeable Notes”). The transactions contemplated by the Investment Agreement, including the issuance
of the Private Exchangeable Notes, closed on May 28, 2020 (the “Closing”). The Company expects to use the net proceeds
from the placement of the Private Exchangeable Notes for general corporate purposes. The Company previously filed the Investment
Agreement as Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”)
on May 11, 2020.
In connection with
the Closing, the Company and NCLC entered into (i) an investor rights agreement (the “Investor Rights Agreement”) by
and among the Company, NCLC and the Investor on May 28, 2020 and (ii) an indenture (the “Indenture”) by and among NCLC,
as issuer, the Company, as guarantor, and U.S. Bank National Association, as trustee on May 28, 2020, each as described in further
detail below.
Investor Rights Agreement
Pursuant to the terms
of the Investor Rights Agreement, among other things, the Investor is entitled to nominate one person who shall be appointed to
the board of directors of the Company (the “Board”) promptly following the date of the 2020 annual general meeting
of the shareholders, but in no event later than July 15, 2020. From and after the Closing, until the first date (the “Fall
Away Date”) on which the Investor no longer beneficially owns in the aggregate at least 50% of the number of the Company’s
ordinary shares, par value $0.001 per share (the “Ordinary Shares”), issuable upon exchange of the Private Exchangeable
Notes beneficially owned by the Investor in the aggregate as of the Closing (subject to certain adjustments), the Investor is entitled
to nominate one person (the “Investor Nominee”) for election at each general meeting of the Company at which the class
of directors that the initial Investor Nominee shall be designated is up for election and to designate one person to be a non-voting
observer to the Board and any committee of the Board.
In addition, until
the later of (i) the Fall Away Date and (ii) the one-year anniversary of the Closing (the “Standstill Period”), the
Investor and its affiliates are subject to a voting agreement with respect to certain matters. During the Standstill Period, the
Investor and its affiliates are subject to customary standstill provisions.
The Investor Rights
Agreement also provides for customary registration rights for the Investor and its affiliates, including demand and piggyback registration
rights, beginning six months after the Closing and contains customary transfer restrictions.
The foregoing summary
of the Investor Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text
of such agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Indenture
The Indenture provides
that until but not including June 1, 2021, no cash interest shall be payable on the Private Exchangeable Notes. Instead, interest
shall accrue at a rate of 7.00% per annum and be added as an accretion to the principal amount of the Private Exchangeable Notes
on each of December 1, 2020 and June 1, 2021. On and following June 1, 2021 until but not including June 1, 2025, interest shall
accrue in a combination of (x) cash at a rate of 3.00% per annum, to be paid in arrears on December 1st and June 1st
as applicable during this period, and (y) accreted interest at a rate of 4.50% per annum added as an accretion to the principal
amount of the Private Exchangeable Notes on each June 1 and December 1. On and following June 1, 2025, interest shall accrue in
cash at a rate of 7.50% per annum and be paid in arrears on each of December 1, 2025 and June 1, 2026.
The
Private Exchangeable Notes will mature on June 1, 2026 (the “Maturity Date”) unless earlier exchanged, redeemed or
repurchased.
The
Private Exchangeable Notes will be exchangeable for NCLC’s redeemable preference shares at any time prior to the close of
business on the business day immediately preceding the Maturity Date. Upon exchange, the preference
shares will be immediately and automatically exchanged (without any further action being required to be taken by exchanging
holders of the Private Exchangeable Notes), for each $1,000 accreted principal amount of exchanged Private Exchangeable Notes,
into a number of Ordinary Shares based on the exchange rate. The exchange rate will initially be 82.6446 Ordinary Shares per $1,000
principal amount of Private Exchangeable Notes (equivalent to an initial exchange price of approximately $12.10 per Ordinary Share),
subject to adjustment.
NCLC
may redeem the Private Exchangeable Notes, in whole but not in part, following
the occurrence of certain tax law changes at a redemption price equal to 100% of the accreted principal amount of the Private
Exchangeable Notes to be redeemed, plus accrued and unpaid interest, if any,
to, but not including, the redemption date.
Additionally, NCLC
may redeem the Private Exchangeable Notes at its option on or after June 1, 2023, in whole or in part, at a redemption price equal
to 100% of the accreted principal amount per Private Exchangeable Note, if the market closing price of the Ordinary Shares has
been at least 250% of the per share price implied by the exchange rate then in effect for at least 20 trading days (whether or
not consecutive) during any 30 consecutive trading day period.
Upon
the occurrence of a “fundamental change,” which term includes certain change of control transactions, NCLC must offer
to repurchase the Private Exchangeable Notes at a price equal to 100% of their accreted principal amount, plus accrued and unpaid
interest to, but not including, the date of repurchase. In addition, if certain corporate events occur prior to the Maturity Date
or if NCLC delivers a notice of tax redemption, NCLC will, in certain circumstances, increase the exchange rate for a holder who
elects to exchange its Private Exchangeable Notes in connection with such corporate event or notice of tax redemption, as the case
may be.
The
Indenture contains customary covenants and events of default.
The foregoing summary
of the Indenture and the Private Exchangeable Notes does not purport to be complete and is qualified in its entirety by reference
to the full text of the Indenture, including the form of Private Exchangeable Note contained therein, which is attached as Exhibit
4.1 to this Current Report on Form 8-K and incorporated herein by reference.