Shares of Saga PLC (LON: SAGA) surged 11.9% after rumours emerged that it is in talks to raise approximately £170 million ($238.3 million) in debt to support its operations given the ongoing COVID-19 pandemic lockdowns.
The company that provides insurance and travel services to people over 50 years of age is likely to use its insurance business as security for the loan given its solid performance despite the coronavirus pandemic's impact.
However, according to sources familiar with the discussions, a deal has not been sealed yet, and may not materialise. The travel and insurance company is also looking to refinance some of its existing loans.
Saga announced in late January that it had accumulated cruise bookings worth £140 million and that all travellers on its ships would have to be vaccinated. The above figures reveal the massive pent up demand for cruises.
The company’s shipping arm is likely to benefit immensely from the phased reopening of the UK and other countries that have successfully rolled out vaccination campaigns this year, which could lead to the resumption of international cruises much sooner than expected.
Saga raised £150 million in September 2020, which offset some of its debts, but the firm still had £785 million in debt at the end of December.
The company announced that it was in talks with lenders when releasing its earnings report on 26th January, and the recent rumours may indicate that the talks are at an advanced stage.
Saga share price.
Saga shares surged 11.95% to trade at 337.2p after rising from Monday’s closing price of 301.2p.