Norwegian Cruise Line Holdings Reports Libertad Act Lawsuits In Latest SEC 10-Q Filing
/Norwegian Cruise Line Holdings Ltd.
Miami, Florida
United States Securities and Exchange Commission
Washington DC
Form 10-Q For The Period Ending September 30, 2019
Litigation
Helms-Burton Act
In August 2019, two lawsuits were filed against NCLH in the United States District Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that the Company “trafficked” in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. Although we believe we have meritorious defenses to the claims and intend to vigorously defend these matters, as of September 30, 2019, we are unable to reasonably estimate any potential contingent loss from these matters due to a lack of legal precedence.
In June 2019, the Office of Foreign Assets Control of the United States Department of the Treasury removed the authorization for group people-to-people educational travel by U.S. persons to Cuba. As a result, we have stopped sailings to Cuba effective June 5, 2019 and revised the affected iteneraries. The estimated negative impact resulting from this regulatory change was approximately $0.22 to both diluted EPS and Adjusted EPS for the three months ended September 30, 2019. We expect a negative impact to diluted EPS and Adjusted EPS throughout the remainder of 2019 and into 2020 as a result of the cessation of cruises to Cuba.
On a Capacity Day basis, Net Cruise Cost increased 5.3% (5.9% on a Constant Currency basis) primarily due to an increase in marketing, general and administrative expenses, costs associated with the cessation of cruises to Cuba and other ship operating costs. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 6.2% (6.9% on a Constant Currency basis).
Helms-Burton Act
On August 27, 2019, two lawsuits were filed against Norwegian Cruise Line Holdings Ltd. in the United States District Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that the Company “trafficked” in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. We believe we have meritorious defenses to the claims and intend to vigorously defend these matters.
Unavailability of ports of call may materially adversely affect our business, financial condition and results of operations.
We believe that attractive port destinations are a major reason why guests choose to go on a particular cruise or on a cruise vacation. The availability of ports, including the specific port facility at which our guests will embark and disembark, is affected by a number of factors, including, but not limited to, existing capacity constraints, security, safety and environmental concerns, adverse weather conditions and natural disasters such as hurricanes, floods, typhoons and earthquakes, financial limitations on port development, political instability, exclusivity arrangements that ports may have with our competitors, local governmental regulations and fees, local community concerns about port development and other adverse impacts on their communities from additional tourists and sanctions programs implemented by the Office of Foreign Assets Control of the United States Treasury Department or other regulatory bodies. For example, we had to temporarily change certain itineraries in the Caribbean due to damage some ports sustained during an active hurricane season in 2017. There can be no assurance that our ports of call will not
be similarly affected in the future. Additionally, in June 2019, the Office of Foreign Assets Control of the United States Department of the Treasury removed the authorization for group people-to-people educational travel by U.S. persons to Cuba. Concurrently, the United States De artment of Commerce’s Bureau of Industry and Security removed the authorization to travel for most non-commercial aircraft and all passenger and recreational vessels, including cruise ships, on temporary sojourn in Cuba. Combined, these rulings effectively eliminated the ability of cruise lines to offer cruise travel to Cuba. Limitations on the availability of ports of call or on the availability of shore excursions and other service providers at such ports have adversely affected our business, financial condition and results of operations in the past and could do so in the future.
The U.S. Government announced that, effective May 2, 2019, it will no longer suspend the right of private parties to bring litigation under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act, allowing certain individuals whose property was confiscated by the Cuban government beginning in 1959 to sue anyone who "traffics" in the property in question in U.S. courts. To date, several claims have now been brought against us and other companies who have done business in Cuba. If these suits are successful, they could result in substantial monetary damages against the Company.
Norwegian Cruise Line Holdings Ltd.
Miami, Florida
United States Securities and Exchange Commission
Washington DC
Form 10-Q for the quarterly period ending June 30, 2019
Quarterly Review
In June 2019, the Office of Foreign Assets Control of the United States Department of the Treasury removed the authorization for group people-to-people educational travel by U.S. persons to Cuba. As a result, we have stopped sailings to Cuba during the three months ended June 30, 2019. The estimated negative impact resulting from this regulatory change was approximately $0.06 to diluted EPS and Adjusted EPS for both the three and six months ended June 30, 2019. We expect a negative impact to diluted EPS and Adjusted EPS throughout the remainder of 2019 as a result of the cessation of cruises to Cuba.
Expense
On a Capacity Day basis, Net Cruise Cost increased 4.7% (5.5% on a Constant Currency basis) primarily due to an increase in marketing, general and administrative expenses and an increase due to the addition of Norwegian Bliss, costs associated with the cessation of cruises to Cuba and other ship operating costs.
On a Capacity Day basis, Net Cruise Cost increased 3.7% (4.3% on a Constant Currency basis) primarily due to an increase in marketing, general and administrative expenses and an increase due to the addition of Norwegian Bliss, costs associated with the cessation of cruises to Cuba and other ship operating costs.
Unavailability of ports of call may materially adversely affect our business, financial condition and results of operations.
the authorization for group people-to-people educational travel by U.S. persons to Cuba. Concurrently, the United States Department of Commerce’s Bureau of Industry and Security removed the authorization to travel for most non-commercial aircraft and all passenger and recreational vessels, including cruise ships, on temporary sojourn in Cuba. Combined, these rulings effectively eliminated the ability of cruise lines to offer cruise travel to Cuba. Limitations on the availability of ports of call or on the availability of shore excursions and other service providers at such ports have adversely affected our business, financial condition and results of operations in the past and could do so in the future.
The U.S. Government announced that, effective May 2, 2019, it will no longer suspend the right of private parties to bring litigation under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act, allowing certain individuals whose property was confiscated by the Cuban government beginning in 1959 to sue anyone who "traffics" in the property in question in U.S. courts. Monetary and other claims may now be brought against us and other companies who have done business in Cuba. If these suits are successful, they could result in substantial monetary damages against the Company.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of comprehensive Sanctions (at the time of this Agreement, Cuba, Iran, North Korea, Sudan, Syria and Crimea).
In June 2019, the Office of Foreign Assets Control of the United States Department of the Treasury removed the authorization for group people-to-people educational travel by U.S. persons to Cuba. As a result, we have stopped sailings to Cuba during the three months ended June 30, 2019. The estimated negative impact resulting from this regulatory change was approximately $0.06 to diluted EPS and Adjusted EPS for both the three and six months ended June 30, 2019. We expect a negative impact to diluted EPS and Adjusted EPS throughout the remainder of 2019 as a result of the cessation of cruises to Cuba.
