New Middle Market Coverage: CarTrawler in Debt Talks With Lenders Due to Declining Revenue, Liquidity Pressure Amid Covid-19 Crisis; Deal May Include Debt-for-Equity Swap, New Money

 
Relevant Document:
Financial Report

Irish car rental software company CarTrawler has started debt discussions with its lenders as the business suffers from declining revenue and liquidity pressure amid the Covid-19 crisis and government-initiated lockdown, sources told Reorg.

The company and its lenders are negotiating a debt-for-equity swap with owner BC Partners retaining a majority share in the business and up to 100% of debt being equitized, sources said. The group is also seeking new money, which could be split 50:50 from its lenders and sponsor, sources added.

CarTrawler is working with Kirkland & Ellis, McCann Fitzgerald and PJT as advisors. Lenders, including Alcentra, appointed Arthur Cox, Sullivan & Cromwell and Deloitte, sources added. The company and all advisors declined to comment.

CarTrawler’s debt includes a €160 million term loan B, which dropped to the mid-80s about a month ago, and a €30 million RCF. The term loan has a margin of 4.25% and is due April 29, 2021. Bank of Ireland, Lloyds and Royal Bank of Canada were original lenders on the deal.

The company’s revenue has declined following flight and other transport cancellations after the travel industry ground to a halt due to the Covid-19 pandemic. The group was also affected by having to pay out refunds as customers canceled existing bookings. Its clients include a range of airlines such as Aer Lingus, EasyJet, Norwegian, Wizz Air among others, many of which are highly levered and are seeking government support.

The company agreed a four-year deal with EasyJet in December as its exclusive car rental provider. At the time, CarTrawler’s CCO said it was the company’s largest deal in the past four years.

According to the nine months ending September 2018 report, CarTrawler reported €164.3 million in revenue, 88.4% of which was for the provision of introductory services to ground transport companies, while the remainder was raised through the sale of insurance products to car rental customers. Adjusted EBITDA was €20.3 million in the same period. CarTrawler had cash and cash equivalents of €82 million as of September 2018. Research and development costs for the group totaled €5.64 million that same year.

The Irish technology company provides managed online car rental solutions to travel partners in 174 countries. BC Partners acquired the company in March 2014 for about €450 million, according to news reports, and attempted to sell in 2017 for up to £600 million.

--Aurelia Seidlhofer, Jaishree Kalia