Elliott builds over 10% stake in Norwegian Cruise, seeks board change

By Anuja Bharat Mistry

Feb 17 (Reuters) - Elliott Management on Tuesday disclosed it has built a more than 10% stake in Norwegian Cruise Line Holdings NCLH.N, as the activist investor pushes for changes to the company's board and management to help turn around the cruise operator.

Shares of the company were up about 10% in morning trading. The stock fell more than 13% last year.

The Miami, Florida-based company has struggled with cost pressures, stiff competition and weak demand for its sea voyages, while its rivals, Royal Caribbean RCL.N and Carnival Corp CCL.N, have managed to drive consecutive gains.

The stake makes Elliott one of the company's top investors, along with Capital International Investors and The Vanguard Group, according to data compiled by LSEG.

Elliott said the current board had failed to fulfill their fundamental responsibilities and criticized their selection of management over the last decade, including last week's appointment of former Subway Restaurants boss, John Chidsey, as CEO.

The activist investor has now sought new, independent directors with relevant industry and operational expertise.

"Elliott has approached former Royal Caribbean president and operating chief Adam Goldstein as a potential board nominee," sources familiar with the matter said, adding that the investor wants a more disciplined approach to marketing and to fixing the itinerary.

The nomination deadline is March 13, sources added.

The activist investor also pushed for a new business plan that delivers on available revenue opportunities and restores cost discipline at Norwegian, according to a presentation and letter sent to the company.

"We are committed to delivering durable, long-term value creation, which will be led by our recently appointed CEO, John Chidsey," a spokesperson at Norwegian Cruise Line Holdings said in a statement.

Elliott said it expects to reach a constructive resolution with Norwegian, while noting that it is prepared to take its case directly to shareholders. It believes these actions could help the stock reach $56 per share, or 159% higher than current levels.

"We see the biggest challenge for an activist or the new CEO being that of "a quick fix" as many of the issues that have plagued NCLH cannot be corrected overnight and are a result of multiple years of planning," said Patrick Scholes, analyst with Truist Securities.