Viking Cruises Lands $500M To Stay Afloat Amid Virus

By Sierra Jackson
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Law360 (November 9, 2020, 6:17 PM EST) -- Skadden-guided Viking Cruises said Monday that it's been anchored by investments from private equity firm TPG and asset manager Canada Pension Plan Investment Board that will see the cruise operator receive $500 million in net proceeds, as the industry tries to weather the coronavirus pandemic.

Viking announced the new funding after recently revealing that it was installing testing laboratories on its ocean ships to tests its crew members and guests for the novel coronavirus. The cruise industry has been forced to find new ways to adapt to a virus that shows no signs yet of going away.

Viking Chairman Torstein Hagen in a statement thanked existing minority shareholder TPG and CPP Investments for their contributions, which he said aligned with Viking's "bright" future.

"Over 40 years in the cruise industry have taught me that challenging times — such as these — are often also times of great innovation and opportunity," Hagen said. "This infusion of equity capital will prepare us for future opportunities to continue developing our business."

Founded in 1997 with just four ships, Viking has expanded its enterprise to operate a fleet of more than 70 vessels that travel oceans and rivers around the world, according to its website. The company says on its site that it plans to kick off new voyages to Antarctica, the Arctic and North America's Great Lakes in January 2022.

Both of Viking's investors reiterated their confidence that the cruise business would be able to offer its customers a unique experience in future years.

Bill MacKenzie, CPP Investments' managing director and head of active fundamental equities, said in the same statement that the firm anticipated supporting Viking and its management team alongside TPG.

"While the pandemic has posed many challenges, we have strong conviction that Viking's unique global offering in the cruise industry will continue to be sought out by many guests well into the future," MacKenzie said.

Viking's funding news comes after the CDC's "no sail order" for cruises in U.S. waters expired on Oct. 30, with the agency yet to announce if it would extend the order again, according to its website. The order, which was first issued on March 14, caused major cruise lines to anchor many of their vessels in the U.S.

Many of the major cruise lines, including Norwegian Cruise Line and Royal Caribbean, convened a panel in September to propose safety practices that would allow them to continue their operations while preventing the spread of the virus.

The economic impact on those two operators, in particular, has been stark, with Royal Caribbean reporting an operating loss of nearly $3.59 billion for the nine months ending Sept. 30, compared to the nearly $1.78 billion it made in operating income during the same period last year, according to its quarterly report filed with the U.S. Securities and Exchange Commission earlier this month.

And Norwegian reported an operating loss of nearly $2.94 billion for the nine months ending Sept. 30, relative to the $978.7 million operating income from the same time in 2019, according to its quarterly report.

Along with economic troubles, the industry is facing a handful of suits from investors and passengers over how they responded to the pandemic.

Representatives for Viking and CPP declined to comment beyond the press release and TPG did not immediately respond to requests for comment. Counsel information for TPG and CPP was not immediately known.

The Skadden Arps Slate Meagher & Flom LLP team includes corporate partners Gregg Noel and Amr Razzak, counsel Christopher Bors and associate Mikhail Koulikov; antitrust and competition partners Giorgio Motta and Andrew Foster and associate Susana Santandreu; mergers and acquisitions partner Dmitri Kovalenko; national security partner Michael Leiter and counsel Brooks Allen; and tax partner Nathan Giesselman.

--Additional reporting by Nathan Hale, Dean Seal and Rachel O'Brien. Editing by Alyssa Miller.

Update: This story has been updated with additional counsel information. 

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