Debt-laden Saga considers selling off flagship cruise liners

SAGA is considering selling its two flagship cruise liners as the over-50s holiday and insurance business scrambles to cut its massive debt pile.

The company has announced plans to explore a “partnership arrangement” for its cruising operation, which operates the 999-passenger ships Spirit of Adventure and Spirit of Discovery.

The proposals, first reported by Sky News, are also understood to include selling a stake in Saga’s cruises business or offloading the entire arm as part of a licensing agreement.

Saga said: “The board is exploring opportunities to optimise Saga’s operational and strategic position in cruise, where exceptional demand for its boutique ocean cruise offer means it is operating at close to capacity.”

It comes months after Saga appointed City advisers to explore options for its cruise business amid mounting debts. Directors at the London-listed company recruited experts from Lazard to review proposals to cut its enormous debt pile, which stands above £650m.

The ships have proved a headache for Saga since they were acquired in 2017 when the company was riding high.

Unlike normal cruise operators, which rent from specialist operators or buy second-hand, Saga decided to splash out on its own vessels.

The business hired German shipbuilder Meyer Werft to build the two vessels. Discovery, launched in 2019 at a ceremony hosted by the Duchess of Cornwall, was hit hard during the Covid crisis. Adventure was delivered to the group in 2020 but also had to sit idle.

The lack of cruise activity put a further squeeze on Saga’s balance sheet and added to the debt woes of the group.

Saga has been struggling with debts since it was spun out of a private equity backed vehicle called Acromas on to the stock market in 2014.

The deal led to a huge payday for backers Charterhouse Capital Partners, CVC Capital Partners and Permira, but left the company vulnerable.

Saga had been bundled up with the AA in Acromas, and had a complex debt structure. Since listing in 2014, shares in the group have cratered by 90pc, with the £160m value of the company dwarfed by the size of its debts.

The business has been exploring options to fix its debt pile, including selling assets to raise cash.

Spirit of Discovery cruise liner may be sold by Saga to ease its debt burden