Bigger may be better. Highly accretive - similar to most acquisitions these days - the deal looks like a big positive for NCLH. The $25m synergy target seems conservative.
- Prestige: 49% market share of upscale market
- Broad portfolio of products and experiences: Oceania- country club environment, Regent - luxury-focused, NCL- family-based
- Multiple: 11x adjusted EBITDA (estimated 2014 earnings before synergies)
- $50m bonus may be paid to Prestige shareholders based on reaching 2015 financial targets
- Prestige: formed in 2008. Shielded from recession and economic downturn.
- Prestige: have invested $125m in refurbishments
- Pro-forma Combination: (TTMJune 30 2014): +43% revenue, +18% in net yield, +33% in adjusted EBITDA (includes $25m synergies)
- Pro-forma leverage at end of 3Q: 5.3x
- Soon after, they expect leverage to go back to 4x
Q & A
- Prestige net yield guidance: business continues to be strong; long forward bookings curve
- Prestige 2015 deployment: similar to 2014
- Mid- April to mid-Nov: 2 ships in Europe, 2 ships in Alaska
- Mid Nov- Mid-April: 2 ships in Miami, 1 ship in South America, 1 ship in Australia, 2 ships in Asia, 1 ship (180 day- around the world cruise)
- $25m cost synergies: getting into luxury/upper end agent community; merging customer databases; fuel/marketing cost synergies
- Conservative target? It's early to say. Feel very comfortable with '1st $25 million' for 2015.
- NCL: Can do much better job on front-loading the business. Prestige will finish 2014 50% booked more than NCL
- Will affect interest expense (more efficient on margin basis), D&A will be better as well
- Prestige's highest yielding ship is their oldest ship.
- Focus on customer service and fine dining
- Genting's thoughts on deal: complicated situation but sees enormous value from deal.
- Believe lock up in shares until end of 2015
- Will not be surprised if private equity guys continue to sell.
- Prestige: on the cost side, could do better given their small scale.
- For every $ of synergy on cost, double/triple that on the revenue side
- 7,000 people on combined basis
- Prestige: CEO Frank committed to stay until end of 2015
- Will set up a investor meeting in NYC in November
