Editor's note: Following the publication of this article earlier today HotelBeds loans are offered at around 65. Some investors told Reorg they are welcoming the sponsors' early intervention and support with money coming in pari passu to the existing debt.Relevant Document:HotelBeds Covid 19 response
HotelBeds sponsors CPPIB, Cinven and EQT are proposing to provide €400 million of new money to the business as senior secured debt ranking pari passu with existing credit facilities, according to sources familiar with the situation. The money, which is meant to help the Spanish business-to-business provider of services to the travel industry weather the current downturn will mature at the same time as the existing term loans and pay 1% over the current interest on the term loans.
The company is facing a liquidity pinch, has negative working capital and needs the money as soon as possible. Lenders received the proposal early this week, the majority of the RCF agreed to it as well as about 42% of the first lien creditors. Two third consent is needed.
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Cinven and CPPIB declined to comment. EQT did not reply to request seeking comment.
The purpose of Hotelbeds’ additional funding is to support working capital requirements following the impact of the Covid-19 outbreak, a source close to the sponsors said. Before the Covid-19 outbreak, Hotelbeds was reporting strong results, ahead of budget, including February which was already impacted by the virus outbreak.
Hotelbeds has adapted the working hours of its employees across the business including an increase staffing levels at its operations centers. All its staff are working remotely to protect their health and ensure business continuity.
The new money would add more debt to existing one, however at the moment there is no alternative provider of cash that could support the business. Lenders have appreciated the swift move from the sponsors, some sources commented.
Hotelbeds is a B2B distributor of hotel accommodation (bedbank) and other travel inventory, headquartered in Palma De Mallorca. The group loan facilities comprise of about:
- €1 billion senior secured term loans B and C due September 2023 and paying E+3.25% subject to a margin ratchet,
- €400 million senior secured term loan add-on due September 2025 raised last year to finance a €490 million dividend recap paying E+4.5% and,
- €247.5 million senior secured revolving credit facility due September 2022 paying 4.5%, borrowed by HNVR Holdco limited, a subsidiary of HNVR Midco Limited.
The company’s RCF carries a consolidated total net debt/consolidated EBITDA 8.5x covenant triggered when at least 30% of the RCF is drawn.
The European private capital firm Cinven and Canada Pension Plan Investment Board (CPPIB) agreed to purchase 100% of the Hotelbeds group from the TUI group, for €1.165 billion in 2016. In 2017 HotelBeds bought GTA from EQT-owned Kuoni. When the deal completed Kuoni held a “significant minority position” in the combined businesses, according to
public information at the time.
-- Mario Oliviero