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Azamara cruise line sold


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8 minutes ago, rallydave said:

From comments like the above believe many people do not believe what a private equity company is.  They are the owners of other private companies much like stockholders are owners of public companies.  They are not an employer in that people work for Sycamore other than the private equity employees directly of Sycamore of which it appears are only 28.  Another post talked about a different name on the paychecks, no, it will not be a new name but  continue to be Azamara 

 


 

A bit of semantics but I get your point.  Regardless of what is on your paycheck Sycamore Group will be calling the shots and funding the company.  The President and CEO of Azamara will report to someone within the Sycamore Group.  So while the employees of Azamara may not directly work under Sycamore Group they are at their mercy.  

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1 minute ago, eroller said:


 

A bit of semantics but I get your point.  Regardless of what is on your paycheck Sycamore Group will be calling the shots and funding the company.  The President and CEO of Azamara will report to someone within the Sycamore Group.  So while the employees of Azamara may not directly work under Sycamore Group they are at their mercy.  

Not completely sure your description is accurate.  Day to day activities will be run by the President and report much like public companies report to the SEC.  Sycamore will have some say much like the Board of Directors of a public company but, would not call it calling the shots and as far as funding the company, believe the company will have to get any money needed on the market or perhaps as loans from Sycamore but, not simply Sycamore providing direct money.  

 

I compare the money funding to where I worked before retiring.  Worked for an LLC wholly owned by Boeing and Lockheed. Our CEO did report to the parent companies however we handled all of our accounting and any funded money simply reduced any profits we sent up to our parent companies.  No profits, no operating funds from our parents.  All day to day activities were ours.

 

A big difference with Sycamore is that they are a really small company employee wise and compared to our LLC's parents have almost no infrastructure, procurement, systems, IT or the like that were freely passed down to us as needed.  Almost all of our IT Programs were from one or the other of our parents but, that was about all that came down and like I said, yes we could spend part of our profits as approved by our parents but, that was it money wise so not sure how Sycamore fund Azamara??

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Jerry Lewis once said when asked why he was so active with the Muscular Dystrophy Association; "If you understand, no explanation is necessary.  If you don't no explanation is possible".

 

To paraphrase him,

If you have a negative view of the Sycamore/Azamara relationship/prospects, no explantion will covince you otherwise.  If you prefer to think positively (or at lest wait and see), no explanation is neccesary.

 

There is nobody posting here, whether they have never set foot on an Azamara ship or is their top cruiser who knows what will happen unless there is someone who works with Sycamore or is highly placed with Azamara and is keeping that fact a secret.  What we do have here are some pretty intelligent discussions of possibilities both good and bad and a lot of opinions that are likely biased based on assumptions/feelings rather than facts.

 

As long as those whose opinions are on the far ends of the scale keep it civil, this will be a fascinating thread to follow (and revisit in a couple of years to compare actual results with conjecture).

Edited by bob278
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31 minutes ago, rallydave said:

 so not sure how Sycamore fund Azamara??

 

Well they purchased the company so in a way they have already funded it.  Azamara currently has little to no revenue coming in, as they are not operational and I doubt there are many new bookings, so I'm guessing Sycamore will be funding the daily operations until they get up and running.  Most money on the books (future deposits) is likely held in an escrow account.  There are still employees to be paid, and ships that must remain operational and ready to return to service.  Whether that be via loans secured by Sycamore or their own capital so be it, but Sycamore will still be funding the operation.  

Edited by eroller
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2 hours ago, eroller said:

 

Well they purchased the company so in a way they have already funded it

Please explain how the purchase of the company provides any money to the company.  All if the $201M purchase dollars go directly to the previous owner, RCG,

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9 minutes ago, rallydave said:

Please explain how the purchase of the company provides any money to the company.  All if the $201M purchase dollars go directly to the previous owner, RCG,


Read the rest which I’m sure you did.  

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9 minutes ago, eroller said:


Read the rest which I’m sure you did.  

Yes I did and only asking about the sentence I quoted which says already funded.  Until the purchase closes no money changes hands so how can it already be funded?

 

And, as far as escrow, don't believe any of the money goes into escrow.  After the purchase closes, Azamara may or may not need cash depending on their current situation.  Don't really know if any new money will come from commercial loans or loans from Sycamore which may need to be repaid.  Mostly this information is confidential and will only be known by Azamara and Sycamore.

 

Am not ready to agree that Sycamore will provide funds as you suggest and which we will never know which of us is correct but, for sure the statement that I quoted is incorrect in that purchase indicates already funded.

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25 minutes ago, rallydave said:

Yes I did and only asking about the sentence I quoted which says already funded.  Until the purchase closes no money changes hands so how can it already be funded?

 

And, as far as escrow, don't believe any of the money goes into escrow.  After the purchase closes, Azamara may or may not need cash depending on their current situation.  Don't really know if any new money will come from commercial loans or loans from Sycamore which may need to be repaid.  Mostly this information is confidential and will only be known by Azamara and Sycamore.

 

Am not ready to agree that Sycamore will provide funds as you suggest and which we will never know which of us is correct but, for sure the statement that I quoted is incorrect in that purchase indicates already funded.

 

Azamara is operating at a loss, as are all cruise lines right now.  Any previous loans were secured by the parent RCG to use as needed for their various brands.  They don't disclose exactly how the capital is distributed between brands.  The sale of Azamara won't be coming with any of RCG loan guarantees.  Sycamore will have to fund Azamara from day one to keep operations afloat.

 

As for escrow accounts, I believe they are required by the Federal Maritime Commission, at least for cruise lines operating ships from US ports.  While every exact future deposit is not placed into the escrow account, regular contributions are required to the account based on an amount equal to the amount of unearned passenger revenue.  I think most travel insurance companies also require this of the cruise line in order for them to ensure their passengers.     

Edited by eroller
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Did anyone see anywhere that it said whether it is an all cash deal or if RCG is carrying some paper on the deal?  Or even where is the funding source? To the best of my knowledge, there have been no financial aspects of the deal revealed except the total price.

 

Anyone know specific info other than speculation?

 

Azamara, I suspect, goes through a much smaller burn rate with only three small vessels compared to RCG, NCL and Carnival.

Edited by ChucktownSteve
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12 minutes ago, ChucktownSteve said:

Did anyone see anywhere that it said whether it is an all cash deal or if RCG is carrying some paper on the deal?  Or even where is the funding source? To the best of my knowledge, there have been no financial aspects of the deal revealed except the total price.

 

Anyone know specific info other than speculation?

 

Azamara, I suspect, goes through a much smaller burn rate with only three small vessels compared to RCG, NCL and Carnival.

 

 

All cash deal for $201 million according to Travel Weekly.  It's a really small amount to acquire an established brand and three ships (provided they are paid off).  What I don't know is if those 3 ships were owned outright by RCG, and if not does Sycamore take over the exiting debt agreement?  

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4 hours ago, bob278 said:

Jerry Lewis once said when asked why he was so active with the Muscular Dystrophy Association; "If you understand, no explanation is necessary.  If you don't no explanation is possible".

 

To paraphrase him,

If you have a negative view of the Sycamore/Azamara relationship/prospects, no explantion will covince you otherwise.  If you prefer to think positively (or at lest wait and see), no explanation is neccesary.

 

There is nobody posting here, whether they have never set foot on an Azamara ship or is their top cruiser who knows what will happen unless there is someone who works with Sycamore or is highly placed with Azamara and is keeping that fact a secret.  What we do have here are some pretty intelligent discussions of possibilities both good and bad and a lot of opinions that are likely biased based on assumptions/feelings rather than facts.

 

As long as those whose opinions are on the far ends of the scale keep it civil, this will be a fascinating thread to follow (and revisit in a couple of years to compare actual results with conjecture).

Probably the most sense that's been posted on this thread.

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1 hour ago, ChucktownSteve said:

Did anyone see anywhere that it said whether it is an all cash deal or if RCG is carrying some paper on the deal?  Or even where is the funding source? To the best of my knowledge, there have been no financial aspects of the deal revealed except the total price.

As said, all cash deal.  As Sycamore is a Private Equity Company, their business is buying and selling other businesses using investor money into Sycamore so likely cash Sycamore has.  As this is a purchase by a Private Company, doubt any details will be forthcoming like they would if a public Company under SEC rules.

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2 minutes ago, rallydave said:

As said, all cash deal.  As Sycamore is a Private Equity Company, their business is buying and selling other businesses using investor money into Sycamore so likely cash Sycamore has.  As this is a purchase by a Private Company, doubt any details will be forthcoming like they would if a public Company under SEC rules.

 

Yeah I was trying to make a point in a second hand way that nobody knows the real facts. 😇

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1 hour ago, eroller said:

As for escrow accounts, I believe they are required by the Federal Maritime Commission, at least for cruise lines operating ships from US ports.  While every exact future deposit is not placed into the escrow account, regular contributions are required to the account based on an amount equal to the amount of unearned passenger revenue.  I think most travel insurance companies also require this of the cruise line in order for them to ensure their passengers.  

Sincerely doubt a US Federal Commission has any control over the finances of foreign cruise lines wherever they are operating.  None of the Ocean Cruise Lines are US Companies.  And as far as travel insurance companies having the ability to require how they account for their money, again sincerely doubt this occurs either as no privity of contract between insurers and cruise lines plus insurers cover the full amount of the amount of insurance bought by the customer so no relationship there either.

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11 minutes ago, rallydave said:

Sincerely doubt a US Federal Commission has any control over the finances of foreign cruise lines wherever they are operating.  None of the Ocean Cruise Lines are US Companies.  And as far as travel insurance companies having the ability to require how they account for their money, again sincerely doubt this occurs either as no privity of contract between insurers and cruise lines plus insurers cover the full amount of the amount of insurance bought by the customer so no relationship there either.

 

 

Seriously doubt all you want, doesn't mean it isn't true.  The CDC is a US Federal Agency and they have a lot of control over these non-US companies and their foreign flagged ships.  The ships sail from US ports and carry an abundance of US passengers, so they fall under the CDC.  The same is probably true of the Federal Maritime Commission concerning passenger ships that sail from the US, and cruise companies that operate out of the US.  

 

 

Screen Shot 2021-01-23 at 8.11.02 PM.png

Edited by eroller
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28 minutes ago, eroller said:

 

 

Seriously doubt all you want, doesn't mean it isn't true.  The CDC is a US Federal Agency and they have a lot of control over these non-US companies and their foreign flagged ships.  The ships sail from US ports and carry an abundance of US passengers, so they fall under the CDC.  The same is probably true of the Federal Maritime Commission concerning passenger ships that sail from the US, and cruise companies that operate out of the US.   Guess you agree with my comment regarding insurers?

 

 

Screen Shot 2021-01-23 at 8.11.02 PM.png

OK, that's fine but,, only covers cruise line cancellations or death/injury during cruise and only those from a US Port.  Only requires a bond or financial security to cover this compensation; nothing about putting cruise fares in escrow.  Also Azamara does not have a lot of cruises from US Ports

 

As far as CDC they have control for diseases while the Cost Guard has control over US Waters to the CDC covers for both and only for ships in US Waters as stated in the No Sail Order 

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14 minutes ago, rallydave said:

OK, that's fine but,, only covers cruise line cancellations or death/injury during cruise and only those from a US Port.  Only requires a bond or financial security to cover this compensation; nothing about putting cruise fares in escrow.  Also Azamara does not have a lot of cruises from US Ports

 

As far as CDC they have control for diseases while the Cost Guard has control over US Waters to the CDC covers for both and only for ships in US Waters as stated in the No Sail Order 

 

 

Back peddle all you want, the US Maritime Commission does have some involvement where deposits are concerned as I stated.  I wouldn't put too much faith in your "doubts".  LOL. 

 

As for the CDC and US Coast Guard are concerned, the Coast Guard is responsible for enforcing the CDC requirements including any no sail orders.  

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Sycamore has more cash, and diversified sources of cash, than Royal Caribbean so  exactly what is everyone worried about?  It looks like they bought the company for a bargain, which by the way the reported price would have to include whatever debt was coming with the company.   Azamara will have a rich parent that will likely expand it (Pacific Princess?), so this is good for the company.  The people who have been running Azamara are staying with the company and will likely hire more to take over back of house functions (IT, finance, etc) that Royal has been handling.   This is all good, why is everyone complaining?

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On 1/19/2021 at 10:07 PM, Cool Fool said:

Pardon the pun but we are in the same boat.  Perry Golf is a good fit with Azamara.  Now we have a booking for 2022 with deposits on file for both companies and lots of uncertainty. 


Us, too.  We were on the PerryGolf South American cruise that was scheduled for November 2020.  The same cruise didn't exist for a Lift & Shift, so Azamara allowed us to move to another South American cruise in January 2022 (not a PerryGolf cruise).

I noticed  this week that Azamara/PerryGolf are offering the original South American itinerary in February 2023, so I inquired about doing another L&S.  We were told we'd have to pay the prevailing rate, which at almost $1300 more PP, wasn't palatable to us.  So now we still have the PerryGolf deposit to use sometime in 2022.  A land trip with them is an option, but they are quite pricey.

This the first I've been on CC this week, so I'm just now learning about the sale.  Like everyone else, I'm curious what this will do to the cruise line, and what it means for the PerryGolf partnership.

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1 hour ago, NJCruiserBoy said:

Sycamore has more cash, and diversified sources of cash, than Royal Caribbean so  exactly what is everyone worried about?  It looks like they bought the company for a bargain, which by the way the reported price would have to include whatever debt was coming with the company.   Azamara will have a rich parent that will likely expand it (Pacific Princess?), so this is good for the company.  The people who have been running Azamara are staying with the company and will likely hire more to take over back of house functions (IT, finance, etc) that Royal has been handling.   This is all good, why is everyone complaining?


 

i appreciate your point of view.  Great points for sure.  I hope you’re correct on all accounts. I also wonder if they acquired Pacific Princess.  That would actually build my confidence if they did.  Putting actions and $$ where their mouth  is.  

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The fact is that Azamara’s continued existence is now guaranteed in at least the short term. With a good amount of funds tied up in FCC on booked cruises and no scope to claim on travel insurance if the cruise line fails, a new owner gives me confidence. 

 

The next year or two will logically be about reinvigorating consumers and destination countries’ confidence in the cruise industry; working through the use of FCC and seeing which lines survive. Still a lot of unknowns with Covid rampant and nil revenues. Who knows what shape the industry and separate cruise lines may be in by the time normality returns. Hopefully that happens sometime in 2021 if the vaccines produce the desired outcomes. Without immmunity from vaccines, cities/countries might not let us off ships which are sailing, so what would be the point of cruising?

 

Even so, I’m optimistic of a resumption of something very close to pre-Covid cruising, at least in 2022 if not sooner, and this acquisition appeals to me. From their profitability perspective, smaller ships may become more popular and they’ve bought in at the bottom. The consumer experience may improve due to better administrative systems and equipment as well as management and owners whose only consideration is the small Azamara line.  I don’t know about others but I’ve had some booking/on land administrative problem or other with most cruises I’ve had with Azamara. It can only improve under new management. Over recent years, I’ve felt that RCI has dominated how Azamara goes about things from a cost/profit perspective, which has resulted in a number of unpopular changes. In the huge RCI conglomerate, Azamara must have, at times, felt like a very minor contributor to group profit and a waste of resources. Their surveys have seemed to be more suited to the larger cruise ship experience and/or pitched to elicit a predestined outcome to justify subsequent decisions.

 

Retaining experienced Azamara people, who understand how to give a great cruise experience, at premium (not luxury) standard and pricing, further promotes confidence that this is a good development. Let’s all hope it works out well for Azamara and us.

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2 hours ago, AJCM said:

The fact is that Azamara’s continued existence is now guaranteed in at least the short term. With a good amount of funds tied up in FCC on booked cruises and no scope to claim on travel insurance if the cruise line fails, a new owner gives me confidence. 

 

The next year or two will logically be about reinvigorating consumers and destination countries’ confidence in the cruise industry; working through the use of FCC and seeing which lines survive. Still a lot of unknowns with Covid rampant and nil revenues. Who knows what shape the industry and separate cruise lines may be in by the time normality returns. Hopefully that happens sometime in 2021 if the vaccines produce the desired outcomes. Without immmunity from vaccines, cities/countries might not let us off ships which are sailing, so what would be the point of cruising?

 

Even so, I’m optimistic of a resumption of something very close to pre-Covid cruising, at least in 2022 if not sooner, and this acquisition appeals to me. From their profitability perspective, smaller ships may become more popular and they’ve bought in at the bottom. The consumer experience may improve due to better administrative systems and equipment as well as management and owners whose only consideration is the small Azamara line.  I don’t know about others but I’ve had some booking/on land administrative problem or other with most cruises I’ve had with Azamara. It can only improve under new management. Over recent years, I’ve felt that RCI has dominated how Azamara goes about things from a cost/profit perspective, which has resulted in a number of unpopular changes. In the huge RCI conglomerate, Azamara must have, at times, felt like a very minor contributor to group profit and a waste of resources. Their surveys have seemed to be more suited to the larger cruise ship experience and/or pitched to elicit a predestined outcome to justify subsequent decisions.

 

Retaining experienced Azamara people, who understand how to give a great cruise experience, at premium (not luxury) standard and pricing, further promotes confidence that this is a good development. Let’s all hope it works out well for Azamara and us.

Excellent summation of my thoughts 

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This post will be the 300th in this topic and boy opinions are all over the place concerning the sale of Azamara to Sycamore Partners. Well here is my take:

 

1. Private Equity firms purchase companies as an investment to eventually increase the value for the PE principals.  They have the funds on hand (either the ready cash or lines of credit) to properly fund the purchased company well into the future.  As something to think about .... Royal Caribbean may be more at risk than Azamara at this point in time if cruising doesn't start pretty soon. 

 

2. To some extent, the survival of Azamara is in the hands of the cruising public. If, as I have read, thousands of people cancel their cruises and frighten people from booking future cruises, well then this will be an unfortunate situation that would certainly have negative consequences for the company.

 

3. As an investment, Sycamore bought a fully functional cruise line with three ships for what I feel is a  rock bottom price of 201 million.  They are aware of the current COVID situation and I'm sure have researched the cost of no sailings for an extended period of time. They also know if Azamara was making money (and how much) prior to the shutdown .... so I assume they were.

 

4. With Celebrity now going to a more all inclusive sailing option .... this made Azamara expendable and as such it was sold. Makes sense for everyone.

 

5. SO ...... that is my take. I don't expect any changes for quite some time in the operations and quality of the Azamara cruise experience. The staff will remain. And of coarse Sycamore knows nothing about the cruise industry but Azamara management does and at this time  with new deeper pockets,  it is probably in a more secure place financially than RCL, Carnival or Norwegian.

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