It’s time to sell assets in Royal Caribbean Group (NYSE: RCL). The company announced on Tuesday that it had signed a definitive agreement to sell its luxury cruise line Azamara to the well-known private equity firm Sycamore Partners. The price, which is to be paid entirely in cash, is $ 201 million.
In the world of major cruise operators, Azamara is a relatively small fish, consisting of three medium-sized ships – the Journey, Quest and Pursuit. Sycamore Partners will be the new owner of this trio, in addition to the associated intellectual property.
Royal Caribbean said it will use the proceeds from the sale to help expand its Royal Caribbean International, Silversea and Celebrity Cruises lines.
Image source: Getty Images.
In the press release announcing the sale, CEO Richard Fain said, “Our strategy has evolved to put more resources” in the trio and “work to increase them as we emerge from this unprecedented period”.
The “unprecedented period”, of course, is the coronavirus era, which has been a terrible time for cruise ship operators due to the collapse of the global travel industry.
The company added that the deal, which is expected to close this quarter, will result in a one-time $ 170 million non-cash charge. As Azamara is small compared to Royal Caribbean’s leading cruise lines, the company said it should not have a “material” impact on its future financial performance.
Unfortunately, it probably won’t have a material impact on your chances of survival either. With an estimated monthly cash burn rate of $ 270 million while in lockout mode, it can last for just over a year before your pile of green runs out.
In the middle of Wednesday afternoon, Royal Caribbean’s shares fell 0.6%, against the 1.5% gain from S&P 500 index.