It’s asset sale time to Royal Caribbean Group (NYSE: RCL). The company announced on Tuesday that it has signed a final agreement to sell its luxury cruise line Azamara to well-known private equity firm Sycamore Partners. The prize, which must be paid in full in cash, is $ 201 million.
In the world of large cruise line operators, Azamara is a relatively small fish, consisting of three medium-sized ships – the voyage, the quest and the pursuit. Sycamore Partners will be the new owner of this trio, plus associated intellectual property.
Royal Caribbean said it would use the proceeds from the sale to expand the Royal Caribbean International, Silversea and Celebrity Cruises lines.
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In the press release announcing the sale, CEO Richard Fain said: “Our strategy has evolved to put more of our resources behind” the trio and “work to grow it as we move out of this unprecedented period come.”
The ‘unprecedented period’ is, of course, the era of the coronavirus, which was 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, non-cash impairment charge of $ 170 million. As Azamara is small relative to Royal Caribbean’s main cruise lines, the company said it should not have a “significant” impact on its future financial performance.
Unfortunately, it is also unlikely to have a significant impact on the chances of survival. With a monthly cash burn rate of $ 270 million while in shutter mode, it could barely take more than a year for its stack to go green.
In the middle of the afternoon, Royal Caribbean shares traded up 0.6%, compared to the 1.5% gain of the S&P 500 index.