The Funchal, launched in 1961 and destined for the scrap yard, has been rescued by a British company, Signature Living.
The cost of making the ship seaworthy is prohibitive but the company bid €3.9 million, well above the auction list price of €2.3 million, and aims to refit the vessel for use as a floating hotel.
The insolvency administrator for the company that owned the ship, Pearl Cruises, confirmed that interested parties made four offers and that the British had won the contest.
A representative of the British business, who was present at the on-board auction at Cais da Matinha in Lisbon, confirmed that the Funchal will be taken to England and that this is the first vessel the company has acquired.
Funchal was one of four ships acquired by the businessman, Rui Alegre, who had a plan to set up a cruise business. Alegre managed to borrow almost €150 million from Montepio against collateral of only 40% of this amount.
See: ‘Montepio Bank's reckless lending to favoured businessman’
The Funchal attracted four proposals: one from a Turkish group, which acquired the Porto and the Lisbon for scrap and two bids from two consortia, one Portuguese-Brazilian and another Portuguese-French.
The auction was held in the ship's Green Island lounge, which features mirrored ceilings and sophisticated decor from the ship’s last voyage, the 2014 New Year's Eve celebrated in Madeira.
"I could have offered more," said the Signature Living representative when asked if the amount paid for the ship was too high.
Funchal was built by the Insulana Navigation Company and made its maiden voyage in 1961.