Over 50s specialist travel operator Saga is mulling a range of capital raise options that could see it offload its two-ship cruise business.
Heavily in debt, Saga is working with advisers to restructure and raise capital. The cruise line business offers the easiest way to unlock extra funding.
Saga released a statement to the London stock market, where it is listed: “The board is exploring opportunities to optimize Saga’s operational and strategic position in cruise. There is exceptional demand for boutique ocean cruises, and is operating at close to capacity.”
Various Capital Raise Options Being Discussed
Options discussed are outsourcing the cruise business and licensing it to another cruise operator, selling a stake, or a sale and leaseback deal for its two ships.
Saga operates the Spirit of Adventure and Spirit of Discovery ships, which are relatively new and have a capacity for almost 1,000 guests.
Saga Cruises is based in the UK and serves a mostly UK market of mature, over-50-year-old guests. It sails from Portsmouth and Dover in the UK to Northern Europe, the Mediterranean, and the Canary Islands.
It also offers longer, month-long itineraries to the Caribbean, the US East Coast, and Canada. It also operates a separate river cruises division.
Saga also sells group tours, all-inclusive vacations, tailor-made trips, and insurance and financial services for the over-50s. Based on Saga’s balance sheet released late last year, the company has a net debt of more than £650 million.
Chairman keeping business afloat
It has relied on funding from Chairman Roger de Haan for some time. The son of Saga’s founder, de Hann, has now loaned the business around £85 million. Mr de Hann was brought back in 2020 to help turn around the company during the COVID-19 pandemic.
Its travel business portfolio, including the ocean and river cruise lines, is relatively prosperous and posted upbeat revenue and profit forecasts late last year. The underperforming insurance division has dragged down the overall business.