Hurtigruten’s long-awaited proposal finally landed late at night on 21 February 2023. Supported by 54% of its bank lenders, there are two main components to the agreement —  a refinancing of 2023 maturities funded by a new five-year facility provided by Albacore — and a two-year A&E for its term loans.

If the deal can gain support from a wider group of investors, sponsor TDR will breathe a sigh of relief. The troubled Norwegian cruise liner continues to be loss-making, with the sponsor drip feeding in funds, ahead of a return to profitability. But future recovery is less than clearcut with Hurtigruten undershooting its financial guidance (just three months after they issued their forecasts).

Under the proposed plan, lenders will benefit from various credit enhancements such as margin uplift, upfront fees, covenant tightening and some de-leveraging on day one. TDR has sweetened the deal by giving away an undisclosed amount of equity to the new money provider Albacore via warrants (costing the fund €17.5m). And it has also agreed to equitise some of its PIK loans as a concession to get the deal over the line.

Hurtigruten will benefit from maturity extensions that will allow it to kick the refinancing problem further down the road. But in the meantime it will be burdened with higher interest costs, which might be a tall ask for a company that continues to burn cash. Also, its bond maturities are just around the corner but a business plan recovery is nowhere in sight. This raises a question if the €173m liquidity available after the restructuring can provide enough runway to a meaningful recovery.

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