It's asset sale time at Royal Caribbean Group (NYSE:RCL). The company announced Tuesday that it has signed a definitive agreement to sell its Azamara luxury cruise line to well-known private equity firm Sycamore Partners. The price, which is to be paid entirely in cash, is $201 million.
In the world of big cruise line operators, Azamara is a relatively small fish, consisting of three mid-sized ships -- the Journey, the Quest, and the Pursuit. Sycamore Partners will be the new owner of this trio, plus associated intellectual property.
Royal Caribbean said it will use the proceeds of the sale to help expand its Royal Caribbean International, Silversea, and Celebrity Cruises lines.
In the press release announcing the sale, CEO Richard Fain said, "Our strategy has evolved into placing more of our resources behind" the trio and "working to grow them as we emerge from this unprecedented period."
The "unprecedented period," of course, is the coronavirus era, which has been an awful 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 $170 million one-time, non-cash impairment charge. Since Azamara is small relative to Royal Caribbean's main cruise lines, the company said it should not have a "material" impact on its future financial performance.
Unfortunately, it also probably won't have a material impact on its chances for survival. With a monthly cash burn rate estimated at $270 million while it's in batten-down-the-hatches mode, it can last barely more than a year before its pile of green runs out.
In mid-afternoon trading on Wednesday, Royal Caribbean's shares were down 0.6%, against the 1.5% gain of the S&P 500 index.