By selling off one of its assets, Royal Caribbean is trying to shore up cash. But by incurring an impairment charge, is the company reaching its goal or just creating an illusion?
Royal Caribbean Group said it would sell its Azamara line to private equity firm Sycamore Partners for $201 million in cash, to focus more on its bigger brands as the cruise operator deals with the impact of the COVID-19 pandemic.
Sycamore would acquire Azamara’s three-ship fleet and associated intellectual property, Royal Caribbean said on Tuesday.
The company said the deal would allow it to focus on expanding its Royal Caribbean International, Celebrity Cruises and Silversea brands, which as of its latest annual filing operated more ships than Azamara.
Royal Caribbean would incur a one-time, non-cash impairment charge of about $170 million, even as it said the sale would not have a material impact on its financials.
The deal is expected to close in the first quarter of 2021.
Cruise operators have been rushing to shore up cash reserves over the last few months as the global health crisis brought the industry to a virtual standstill. (Reporting by Praveen Paramasivam in Bengaluru; Editing by Ramakrishnan M.)
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