The Saga PLC (LON: SAGA) share price surged 10.1% after responding to a news report from Sky News stating that the travel company for over 50s is actively seeking strategies to generate funds from its ocean cruise division, which might include the sale of its two primary ships or transferring the entire segment through a licensing deal.
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The news report further speculated that the highly-indebted company had collaborated with financial advisors to explore various alternatives. These alternatives range from selling a portion of the cruise division to other potential strategies.
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Insiders in the financial sector mentioned that although this initiative has been in progress for several weeks, definitive decisions have yet to be made. However, they noted that Saga’s management has recognised that the ocean cruise branch, which operates the Spirit of Adventure and Spirit of Discovery, presents the most promising opportunity to secure additional financing.
In November, Sky News reported that Saga, known for offering insurance and holiday services to the over-50s market, had engaged Lazard’s banking services for consultation.
Facing a hefty debt burden for some time, Saga is expected to provide a business update to the financial community next week. Previously, to manage its financial obligations, the company secured a £35 million investment from its chairman, Roger de Haan, further increasing the substantial debt owed to him.
Saga issued a statement confirming that its leadership is actively exploring ways to enhance its effectiveness and strategic positioning in the Cruise sector. The high demand for its unique boutique ocean cruise offerings has resulted in operations nearing total capacity.
The Board has concluded that pursuing a partnership for the Ocean Cruise segment aligns with the company’s overarching strategy. This strategy aims to transition towards a more capital-efficient business model, facilitating further expansion, solidifying value, lowering debt levels, and boosting long-term shareholder returns.
A definitive decision has yet to be made, and there is no assurance that any partnership will materialise. Saga will issue an additional statement when suitable, providing further updates on the situation.
Saga share price.
The Saga share price surged 10.13% to trade at 160.90p from Thursday’s closing price of 146.10p.
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