REG - Travelex Financing - Update on debt restructuring

PJT PartnersAnnouncement

07/07/2020 17:20

RNS Number : 3033S
  
Travelex Financing PLC
  
07 July 2020
  
 

Travelex Financing Plc
Update on debt restructuring
 
Travelex Financing Plc
7 July 2020
 
 
7 July 2020
 
FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
Travelex Financing Plc ("Travelex" or the "Company")
Travelex reaches agreement on debt restructuring with £84m funding and announces trading update 
Travelex is pleased to announce it has reached agreement with at least 66.7% of its Senior Secured Noteholders (the "SSNs") and all of its Revolving Credit Facility ("RCF") lenders on the terms of a comprehensive debt restructuring.
The transaction will provide the Company with £84m of new liquidity and an 84% reduction of its existing financial debt, providing a stable platform from which to emerge successfully from the challenges posed by the Covid-19 pandemic.
Key terms of the restructuring:
●    SSNs, led by members of an Ad Hoc Committee of SSNs (the "AHC"), will take full control of Travelex 
●    £84m of new money cash funding will be provided by participating SSNs in the form of New Senior Secured Notes
●    The AHC will provide an initial commitment through bridge funding of £15m provided yesterday (to be refinanced by the New Senior Secured Notes), with upsizing flexibility for both the AHC and any participating SSNs wishing to subscribe
●    Full equitisation of the existing €360m SSNs
●    Full reinstatement of the existing £50m RCF in the form of a Reinstated Term Loan and c£10m guarantees in the form of reinstated guarantees (together, the "New RCF")
●    The New Senior Secured Notes will be underwritten by members of the AHC, and available to all existing SSNs for participation on a pro rata basis
●    Participants in the new money will receive 100% of the equity in a new Travelex group holding company (New Holdco)
●    SSNs will receive warrants over 17.5% of New Holdco equity at exit. Bridge Funding providers will receive further warrants of 2.5% of New Holdco Equity
●    A 50bps incentive fee for SSNs that sign into the Lock Up Agreement
The transaction contemplates the division of the existing Travelex group into two parts: 
i) Initial FundCo ("New Travelex"), which will comprise the wholesale and outsourcing business and certain international retail businesses of Travelex abroad (Brazil, Middle East & Turkey, Nigeria and Asia Pacific)
ii) Optional FundCo ("Warehouse Travelex"), which will principally comprise certain of Travelex's retail businesses in UK, Europe and North America.  These businesses will remain under the safe harbour of the existing Travelex corporate structure unless it is determined that they may transfer to New Travelex as break-even or profitable entities.
Many of the New Travelex businesses will be transferred at completion, while certain of these businesses will require regulatory approvals which are expected to be obtained in the coming months.
Members of the AHC are expected to control over 50% of the equity of New Travelex.  
The transaction is expected to complete by early August.
Commenting on the transaction agreement, Travelex's CEO Tony D'Souza said: 
"This agreement marks a significant and positive milestone in the strategic initiatives which the Company has pursued over recent months.  The restructuring will provide Travelex with a stable platform through £84m of new liquidity and a substantial debt reduction, so that it can rebuild revenues under the stewardship of its new shareholders. I want to thank again all of Travelex's employees who have continued to work tirelessly through this challenging period.  I am also grateful to our secured lenders and all of our stakeholders for their continued support as we reach this milestone and look forward to the successful completion of the transaction."
 
Trading update announcement
Travelex will provide an update on the restructuring and on Q4 2019 and Q1 2020 trading later today.  The update will be issued on the Company's website (https://www.travelex-corporate.com/EN/InvestorRelations/FinancialStatement/).
Further information
A complete description of the terms and conditions of the restructuring are set out in the lock-up agreement. A copy of the lock-up agreement is available to SSNs upon request from the information and tabulation agent (see below) and will be available upon registering on https://glas.agency/registration.
Before making a decision with respect to the lock-up agreement, SSNs should carefully consider all of the information.
Further details about the transaction can be obtained from the information and tabulation agent:
 
GLAS Specialist Services Limited
45 Ludgate Hill
London EC4M 7JU
United Kingdom
Telephone: +44 20 3597 2940
Attention: Manager Liability Management - Travelex
Email: LM@glas.agency
www.glas.agency
 
SSNs are also encouraged to contact PJT Partners, financial adviser to the AHC, with any questions that they may have in relation to the process (ProjectMullen@pjtpartners.com, +44 (0) 203 650 1100).
 
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Details of the transaction 
 




New money / 
New Senior Secured Notes


●    £99.2m New Senior Secured Notes, comprising £84m cash plus cashless issuance premium of 12.5% (£10.5m) and cashless backstop fee of 5% (£4.7m)
●    Interest: PIK - 7.5%; cash/PIK toggle - 5.0% 
●    Term: 5 years, bullet
●    Call protection: 103, 102, 101, years 1-3 respectively
●    Ranking: senior secured, junior to RCF and operating facilities
●    Backstop providers: certain AHC and other participating SSNs
●    New Money Notes to be listed on Irish or equivalent stock exchange
 




Equity


●    New Money Notes to receive 100% of New Holdco equity, subject to dilution by Equity Warrants, Backstop Warrants and MIP 
●    Stapled to New Senior Secured Notes
 




SSNs


●    Fully equitised
●    To receive Equity Warrants equivalent to 17.5% of restructured equity in New Holdco
●    Right to participate in the New Senior Secured Notes on a pro rata basis




RCF


●    £59.6m, reinstated at par as Reinstated Term Loan (£50m) and a new guarantee facility (£9.6m, of which £7.7m currently issued)
●    Term loan: 4 years, bullet
●    Ranking: super senior secured
 




Operating facilities


●    Certain ordinary course operating facilities to be made available by existing RCF lenders and other third parties, including FX dealing lines, an intraday facility, cash leasing and consignment stock
●    Ranking: super senior, senior to the New RCF
 




Bridge funding


●    AHC to provide up to £30m in aggregate principal amount during the period to completion, initial commitment of £15m in cash
●    To be repaid using proceeds of New Senior Secured Notes at completion 
●    Bridge funders to receive Equity warrants equivalent to 2.5% of restructured equity in New Holdco, exercisable upon an exit




 This announcement has been issued through the Companies Announcement Service of Euronext Dublin.


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