TripAdvisor marks bond sale proceeds to retire notes callable in July

By Devika Patel

Knoxville, Tenn., Sept. 24 – TripAdvisor Inc. is considering retiring some of its 7% high-yield bonds due July 2025 when they become callable in July 2022.

The company is prioritizing deleveraging with excess cash on the balance sheet, which was accrued from two bond sales over the last year.

“We have done two bond offerings in the last 12 months,” senior vice president, treasurer and chief financial officer Ernst J. Teunissen said at Bernstein's 18th Annual Pan European Strategic Decisions Conference on Thursday.

“Last year [we did] a high-yield offering and then back in March [we did] a convertible offering, so we have a significant amount of cash on our balance sheet, and we assume that we will have excess cash on our balance sheet going forward.

“So, the question then turns to how do you spend that?” Teunissen asked rhetorically.

“Do you spend it on acquisition? Possibly.

“Another very likely, and perhaps obvious, use of proceeds would be to pay down some of that debt, so we have an opportunity in July 2022 when our bonds, which are non-call two, our high-yield bonds, we have an opportunity to retire some of those and that’s one of the things that we are looking at,” he said.

On July 7, 2020, the company priced $500 million five-year senior notes (B1/BB-) at par to yield 7% in a drive-by.

Pricing came tighter than talk for a yield in the 7˝% area.

The notes are non-callable for two years.

J.P. Morgan Securities LLC led the Rule 144A and Regulation S offering.

Proceeds were earmarked for general corporate purposes.

On March 22, TripAdvisor priced $300 million of five-year convertible notes at par with a coupon of 0.25% and an initial conversion premium of 37.5%.

Pricing came at the cheap end of talk for a coupon of 0% to 0.25% and at the midpoint of talk for an initial conversion premium of 35% to 40%.

BofA Securities Inc. (lead left), Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC were active bookrunners for the Rule 144A offering, which had a a $45 million greenshoe, which was fully exercised a few days later, lifting the total deal size to $345 million.

The notes are non-callable until April 1, 2024 and then subject to a 130% hurdle.

They will be settled in cash, shares or a combination of both.

In connection with the offering, the company entered into capped call transactions.

Proceeds were earmarked to cover the cost of the call spread and for general corporate purposes, which may include the repayment of debt, including the redemption of its 7% senior notes due 2025.

TripAdvisor is a Needham, Mass.-based travel guidance platform.

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