Hotelbeds S.L.U. is understood to have received consent from 95% of lenders to its two-year loan amend-to-extend request by the reply deadline on Dec. 21, according to market sources.
The request comes alongside a €175 million equity like cash injection from sponsor shareholders Cinven, CPPIB and EQT in the form of a Hold-co PIK loan. Lenders replying by the deadline receive a 25 bps fee, and Hotelbeds has also agreed a reduction in the debt basket available for non-obligor loans.
On closing, the extension will leave Hotelbeds' debt structure split between a €1 billion term loan B due September 2025, €800 million in TLC/TLD facilities due September 2027, and an approximately €250 million revolver due September 2024. The latest deal comes after the sponsors provided a €400 million pari-passu loan in March, and the firm was last seen in the syndicated market in September 2018 with a €400 million incremental loan to fund a dividend.
Hotelbeds is a Spain-based B2B travel services group and has come under severe earnings pressure due to the pandemic. The firm reckons it has enough liquidity to see it through the ongoing COVID-19 related restrictions, according to market sources who add the new cash injection, which is contingent on the extension, therefore provides a further cushion.
In response, S&P Global Ratings has affirmed its CCC+ issuer and 4 recovery ratings on Hotelbeds noting reduced refinancing and liquidity risks following the latest deal, while noting the firm’s uncertain and long path to a full recovery. Prior to the new injection the firm had about €381 million of cash on its balance sheet.
In its assessment, Ratings said it does not expect a full recovery in leisure travel until 2023 even if domestic travel has proved resilient in several of Hotelbeds’ jurisdictions. In the second half of its fiscal year 2020, the firm reported revenues of €451 million compared with €3.4 billion across the second-half of fiscal year 2019. The firm’s revolver is close to fully drawn and comes with a minimum liquidity covenant of €75 million.
Cinven and CPPIB carved-out Hotelbeds from TUI in a €1.165 billion deal in 2016, backed by a €640 million financing. EQT became a shareholder following the acquisition of travel services group GTA in 2017. The firm has also been through various refinancings, recaps and repricings.