Travelport cuts leverage to 3.6x, prepays $56 million of term loans

By Devika Patel

Knoxville, Tenn., Nov. 2 – Travelport Worldwide Ltd. continues to deleverage and brought its net leverage down to 3x net debt to adjusted EBITDA in the third quarter, with further reductions planned.

The company prepaid $56 million of term loan debt and reduced its term loan interest rate by 200 basis points.

“We’re making progress in deleveraging and reducing our interest expense,” president and chief executive officer Gordon Wilson said on the company’s third quarter and nine months ended Sept. 30 earnings conference call on Thursday.

“Our net leverage is now down to 3.6x the last 12 months’ adjusted EBITDA with line of sight to further reductions.

“During quarter three, we prepaid over $50 million of term loan debt and, in less than 18 months, we reduced the interest rate on our term loans by a total of 200 basis points,” Wilson said.

The company reduced its net debt by $44 million and prepaid $56 million of term loans in addition to the August repricing of a term loan.

“Our net debt reduced by $44 million since June 30,” executive vice president and chief financial officer Bernard Bot said on the call.

“We made prepayments of $56 million against our term loans in the quarter in line with our capital allocation strategy.

“We closed the repricing of our term loan in August which resulted in a further interest rate reduction of 50 basis points,” Bot said.

Adjusted EBITDA decreased 9%, or $14 million, during the quarter to $136 million.

Free cash flow decreased by $22 million in the third quarter to $63 million.

Net debt decreased to $2.07 billion as of Sept. 30 from $2,205,000,000 as of Dec. 31, 2016. It is now comprised of $2,275,000,000 in total debt less $205 million in cash and cash equivalents.

On July 28, Travelport firmed pricing on its $2,266,000,000 first-lien term loan (B2/B+) due September 2021 at Libor plus 275 basis points, the low end of the Libor plus 275 bps to 300 bps.

The term loan has a 0% Libor floor, a par issue price and 101 soft call protection for six months.

Goldman Sachs Bank USA, Bank of America Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley Senior Funding Inc. and UBS Investment Bank are the lead banks on the deal.

Proceeds were earmarked to reprice an existing term loan down from Libor plus 325 bps with a 1% Libor floor.

Travelport is an Atlanta-based provider of transaction processing services to the travel industry.

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