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Lindblad Expeditions, LLC -- Moody's announces completion of a periodic review of ratings of Lindblad Expeditions, LLC

·11 mins read

Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Lindblad Expeditions, LLC

Global Credit Research - 28 Aug 2020

New York, August 28, 2020 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Lindblad Expeditions, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Key rating considerations are summarized below.

Lindblad Expeditions, LLC's B3 corporate family rating reflects the unprecedented impact the global spread of the coronavirus (COVID-19) is having on the cruise industry as a result of the suspension of all itineraries until September 30, 2020 with a high risk that operations could remain suspended for longer. Given the significant disruption, Lindblad is currently generating substantial free cash flow deficits and credit metrics will materially weaken in 2020. Our base case assumes that there will be a slow and extended recovery period starting in 2021. While earnings will improve in 2021, we expect bookings will be remain weak relative to 2019 which will result in Lindblad's debt/EBITDA approximating 6.0x as of year-end 2021. Lindblad's credit profile benefits from its partnerships with National Geographic and the World Wildlife Fund (through its Natural Habitats brand), as well as its strong brand name recognition in the expedition travel segment of the travel industry. Once health safety concerns have been addressed, we believe the historically strong demand for high end expedition cruises given their unique destinations will return as will the corresponding high net yields relative to other luxury cruise lines. In the short run, Lindblad's credit profile will be dominated by the length of time that cruise operations continue to be highly disrupted and the resulting impacts on the company's cash consumption and its liquidity profile. The normal ongoing credit risks include its small scale in terms of absolute level of earnings and number of vessels. Due to the company's small scale, we expect it to maintain stronger metrics than its B3 rating. We consider governance risk is benign as evidenced by a balanced use of free cash to grow its fleet and modest returns to shareholders.

This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.

The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

This announcement applies only to EU rated and EU endorsed ratings. Non EU rated and non EU endorsed ratings may be referenced above to the extent necessary, if they are part of the same analytical unit.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Peter Trombetta Asst Vice President - Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Margaret Taylor Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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