Corporate travel agency CWT is looking to pull a string under an extremely turbulent 18 months. This will be achieved through a significant financial restructuring that will see the family-owned Carlson company become a minority shareholder.
CWT was formerly known as Carlson Wagonlit Travel. It has now entered into an agreement to recapitalize its business with its equity owners and other firms representing more than 90% of the outstanding debt.
The agreement was reached with financial stakeholder . It includes adding $350m of equity capital to the company and eliminating nearly $900m of its debt. This is done by replacing the $1.5billion in existing debt with $625m of first lien debt and an undrawn credit facility. In the event that a debt holder defaults, they are entitled to a first lien debt repayment.
These maneuvers will result in the Carlson holdings ownership being diluted according to Michelle McKinney Frymire (CWT CEO), , who took over from Kurt Ekert.
Refinancing is not expected to be completed by the end the year. This may surprise some after speculation about previous refinances. In September 2013, an industry source informed Skift that CWT was an appealing acquisition target. They stated that they see them as a net loser and suggested there might be others who take an opportunity to consolidate the market.
Rumours circulated also that Certares was an investment firm for private equity, having invested 354 million this week in an aeronautical services company .
McKinneyFrymire stated that all parties are current investors and were well-respected institutional investment managers. They are knowledgeable about the business and supportive of our strategy. CWT will continue to be an independent company. We will also have a few debt holders that will eventually become equity owners, some of which already own a small amount of equity.
McKinneyFrymire doesn’t see any job cuts coming in the near future. She stated that she has already done much of this work, including optimizing the organizational footprint and flattening it.
Over the last few years, CWT has seen a drastic reduction in its size. It has been drastically shrinking over the past few years.
McKinney Frymire stated that there are currently 500 jobs available in the global marketplace.
CWT now has a substantial $400 million in liquidity available as a result of the restructure. Although it claimed that this was the highest amount of its peers, the money will not be used to acquire , which is a key trend during the pandemic.
McKinneyFrymire stated that “We are focused on our people, and technology.” However, that doesn’t mean we won’t make use of any opportunity if it made sense.
It’s just an accidental focal point.
Beyond the Pandemic
McKinneyFrymire has now done the math and said that she hopes to position the company to benefit from the rebound in business travel. McKinney Frymire has been talking with her largest customers and the good news was received “universally”
It is a new chapter, with the former nameake being put on hold. Carlson was established in Minnesota in 1938 by Curt Carlson. Carlson Wagonlit Travel was formed in 1994 by Carlson Wagonlit Travel after its partnership with France’s Wagonlit Travel. In 2006, Accor bought its shares in the company.
CWT wants to emphasize that the 2019 rebrand meant that the company wasn’t called Carlson Wagonlit Travel despite its initials. Carlson Wagonlit Travel will now retain a portion of the company’s shares, although the precise percentage remains to be determined.
McKinney Frymire said, “Having more than 90 percent of debt holders in the agreement is really amazing and shows the support our financial stakeholder have for the company.”
This support also shows a faith in corporate travel’s ability to rebound. They literally bank on it.
Publiated at Wed 15 Sep 2021, 16:05.32 +0000