The company is $1.5 billion in debt and aims to remove almost $900 million in debt through issuing $625 million of new first lien debt at market rates and the use of a new undrawn revolving credit facility. The company will also issue $350 million of new equity capital.
The company said it had entered into an agreement with financial stakeholders representing over 90 per cent of the outstanding debt, including global investment manager Barings LLC, on the recapitalisation plan. The plan will see the debtholders become the company’s new majority owners. The Carlson group took full ownership of the TMC in 2014, buying out JP Morgan Chase’s 45 per cent stake.
CWT said the plan would provide it with “substantial long-term liquidity through the resulting balance sheet cash and new revolving credit facility” and would allow for “all business partners and other providers of goods and services to CWT to be paid in full”.
The company expects to begin soliciting formal approval of the plan from its existing financial stakeholders in the next few weeks and to finalise implementation of the plan later this year.
In June, the company skipped interest payments on its bonds causing ratings agency Fitch to downgrade the company from C to CCC.
At the time, Fitch predicted a difficult deleveraging for the company, forecasting EBITDA to remain negative through the 2021 financial year, despite “meaningful cost-cutting efforts by the company”.
The intentional skipping of the payments allowed the company to open up discussion with its creditors.
“This is great news for CWT and our stakeholders, highlighting the progress we have made to position CWT for long-term success and providing significant financial resources to further grow and develop our business,” said Michelle McKinney Frymire, CWT’s CEO, who stepped up from the CFO role in April.
She added, “The industry is seeing meaningful increases in demand for the first time since the start of the pandemic. As we ramp up operational capacity to continue serving our customers through the recovery, we are continuing to advance our strategic objectives, including driving innovation and delivering industry-leading solutions. We are pleased to be moving ahead with overwhelming support from our financial partners, who will become CWT’s new majority owners, underscoring their confidence in the market, CWT and our strategy and services.”
McKinney Frymire added, “Implementation of this agreement will enable us to move beyond the pandemic, accelerate investments that create industry-leading experiences for our clients and travellers, and position CWT to benefit from the recovery already underway.”
The company said it had used the period of Covid-related travel restrictions and related demand reductions to accelerate many of its strategic development plans and investments across its products, programme delivery and travel services.