Langley, U.K., Dec. 10, 2018
/PRNewswire/ -- Travelport Worldwide Limited ("Travelport") (NYSE:
TVPT), a leading travel technology company, today announced that it
has entered into a definitive agreement to be acquired by
affiliates of Siris Capital Group, LLC ("Siris") and
Evergreen Coast Capital Corp. ("Evergreen") in an all-cash
transaction valued at approximately $4.4
billion. Evergreen is the private equity affiliate of
Elliott Management Corporation ("Elliott").
Under the terms of the agreement, Siris and Evergreen will
acquire all the outstanding common shares of Travelport
for $15.75 per share in cash. The Board of Directors of
Travelport unanimously approved the agreement and recommended that
shareholders vote in favor of the transaction. Elliott and its
affiliates have agreed to vote the common shares owned by them in
favor of the transaction.
Doug Steenland, Chairman of the
Board of Directors of Travelport, said: "This is a good outcome for
Travelport's shareholders. Assisted by external advisers, the Board
concluded unanimously, after taking into account the ongoing
development needs of the business, that entering into this
agreement represents the best way to maximize value for
shareholders. It also enables the company to continue its work to
position itself for growth in the evolving global travel
industry."
Gordon Wilson, President and CEO
of Travelport, commented: "Travelport welcomes this proposed
transaction with Siris and Evergreen, who are specialist technology
platform investors. Throughout the process, Siris and Evergreen
have demonstrated their deep technology expertise together with a
strong commitment to the success of our customers, employees and
partners. We will continue to develop and invest in our platform to
serve the changing needs of our customers in the travel industry.
It is very much business as usual at Travelport and we look forward
to this new era in the company's development."
Commenting on the transaction, John
Swainson, an Executive Partner of Siris, said: "We have been
impressed with Travelport's industry leadership, global scale and
reach, local expertise, world-class management team and commitment
to delivering best-in-class solutions for global travel suppliers
and agencies. Siris looks forward to building on this legacy and
supporting Travelport as it invests in its platform and embarks on
a new phase of innovation and industry leadership."
Frank Baker, Co-Founder of Siris
Capital, added: "Travelport has an impressive track record of
developing and bringing to market best-in-class distribution
capabilities, technology services, innovative payment solutions and
other value-add digital tools for the global travel industry. We
have been impressed by the company's industry-leading GDS
technology platform, which supports mission-critical transactions
for both travel providers and agents. At the same time, Travelport
is redefining the travel payments industry through eNett, a
disruptive and fast-growing leader in secure, virtual travel
payments. Siris looks forward to partnering with the company's
management team and Evergreen in this next phase of Travelport's
evolution and growth as a private company."
Jesse Cohn, Partner at
Elliott, commented: "Under Gordon's leadership, Travelport has
built a leading travel technology platform and a leading B2B
payments offering in eNett. We look forward to investing in the
Travelport team and working with them and Siris to build upon and
advance Travelport's strong track record of technology innovation
in serving global travel suppliers and agencies."
Travelport may actively solicit alternative acquisition
proposals from third parties during a "go-shop" period from the
date of the agreement through January
23, 2019. Travelport will have the right to terminate
the agreement to enter into a superior proposal subject to the
terms and conditions of the agreement. There is no assurance that
this process will result in a superior proposal. Travelport does
not intend to disclose developments with respect to the
solicitation process unless and until the company determines such
disclosure is appropriate.
The proposed transaction is currently expected to close in the
second quarter of 2019 and is subject to customary closing
conditions, including approval by Travelport shareholders and
receipt of required regulatory approvals. The transaction is not
subject to any financing condition.
Upon the completion of the transaction, Travelport will become a
privately held company and Travelport common shares will no longer
be listed on any public market. Travelport's headquarters will
remain in Langley, U.K.
Financial Guidance
In connection with the announcement of the transaction,
Travelport is providing the following update to its financial
guidance.
The following forward-looking statements, as well as those made
elsewhere within this press release, reflect expectations as of
December 10, 2018. The company
assumes no obligation to update these statements. Results may
be materially different and are affected by many factors detailed
in this release and in Travelport's quarterly and annual Securities
and Exchange Commission ("SEC") filings and/or furnishings, which
are available on the SEC's website at www.sec.gov.
The company is reaffirming its financial guidance ranges for
full year 2018 and, as stated in its press release of November 1, 2018, the company anticipates its net
revenue, Adjusted EBITDA and Free Cash Flow to be at the lower end
of their respective ranges. Further, the company anticipates
Adjusted Net Income and Adjusted Income per Share - diluted to be
within the mid-to-higher-end of their respective ranges.
|
|
|
(in $ millions,
except per share amounts)
|
FY 2018
Guidance
|
Growth
|
Net
revenue
|
$2,535 -
$2,585
|
4% -
6%
|
Adjusted EBITDA
(1)
|
$585 -
$605
|
(1)% -
3%
|
Adjusted Net Income
(1)
|
$170 -
$185
|
(6)% -
2%
|
Adjusted Income per
Share – diluted (2)
|
$1.34 -
$1.46
|
(7)% -
1%
|
Free Cash Flow
(3)
|
$210 -
$230
|
5% -
15%
|
The company refers to certain non-GAAP financial measures in
this press release, including Adjusted EBITDA, Adjusted Net Income
(Loss), Adjusted Income (Loss) per Share - diluted and Free Cash
Flow. Please refer to pages 6 to 7 of this press release for
additional information.
- Adjusted EBITDA guidance consists of Adjusted Net Income
guidance excluding expected depreciation and amortization of
property and equipment and expected amortization of customer
loyalty payments of $240 million to
$250 million, expected interest
expense, net (excluding the impact of unrealized gain (loss) on
interest rate derivative instruments) of approximately $110 million and expected related income taxes of
approximately $55 million. Adjusted
Net Income guidance excludes the expected impact of amortization of
acquired intangible assets of approximately $40 million, loss on early extinguishment of debt
of $28 million, expected equity-based
compensation and related taxes and corporate and restructuring
costs of $60 million to $70 million, income from discontinued operations
of $28 million related to the release
of an indemnity provision for liabilities accrued upon the sale of
Gullivers Travel Associates in 2011 and an expected income tax
benefit related to the adjustments above of approximately
$15 million. Travelport is unable to
reconcile Adjusted EBITDA and Adjusted Net Income to net income
(loss) determined under U.S. GAAP due to the unavailability of
information required to reasonably predict certain reconciling
items, such as loss on early extinguishment of debt, impairment of
long-lived assets, unrealized gains or losses on foreign currency
and interest rate derivative instruments, and the related tax
impact of such adjustments along with other tax
adjustments.
- Adjusted Income per Share – diluted guidance consists of
Adjusted Net Income divided by Travelport's expected weighted
average number of dilutive common shares for 2018 of approximately
127 million.
- Free Cash Flow guidance reflects expected net cash provided by
operating activities for 2018 of $345
million to $365 million less
expected cash additions to property and equipment of approximately
$140 million.
The guidance above assumes spot foreign exchange rates as of
December 3, 2018, together with the
impact of foreign exchange rate hedges undertaken during 2017 as
part of the company's rolling hedging program.
Looking ahead to 2019, despite the company's new business wins
with regional and global corporate travel agencies, share gains in
the online travel agency sector, and the continued growth of its
virtual payments business, eNett, the company anticipates that its
business momentum will continue to be tempered by the previously
disclosed specific customer headwinds. The company is therefore
taking steps to restructure and optimize the efficiency of its cost
base.
In the absence of a transaction, the company currently
anticipates its 2019 Adjusted EBITDA to be approximately flat
compared to 2018 as it cycles through the full year impact of these
specific customer headwinds while continuing to invest in order to
fully realize the new growth opportunities that have been
contracted. In addition, the company currently anticipates its 2019
Adjusted Net Income to be slightly down compared to 2018 due to
higher interest expense.
During the pendency of the transaction announced today, the
company does not intend to provide further updates to its 2018 and
2019 guidance and is suspending its 2020 financial targets.
Further, pursuant to the terms of the agreement, the company will
not declare any future dividends during the pendency of the
transaction.
Financing & Advisors
Morgan Stanley & Co. LLC is serving as lead financial
advisor to Travelport, and UBS Securities LLC is serving as joint
financial advisor. Kirkland & Ellis LLP is serving as legal
counsel to Travelport.
Siris and Evergreen have secured committed debt financing for
the transaction from BofA Merrill Lynch, Deutsche Bank AG,
Macquarie Capital, Credit Suisse Loan Funding, LLC, and
Barclays.
LionTree, Deutsche Bank Securities Inc., Macquarie Capital, and
Barclays are acting as financial advisors to Siris. Wachtell,
Lipton, Rosen & Katz is acting as corporate counsel to Siris
and Sidley Austin LLP is acting as financing counsel to Siris in
connection with the transaction.
Gibson, Dunn & Crutcher LLP is acting as legal counsel to
Evergreen.
For further information regarding the terms and conditions
contained in the definitive merger agreement, please see
Travelport's Current Report on Form 8-K, which will be filed in
connection with this transaction.
About Travelport (www.travelport.com)
Travelport (NYSE: TVPT) is the technology company which makes
the experience of buying and managing travel continually
better. It operates a travel commerce platform providing
distribution, technology, payment and other solutions for the
global travel and tourism industry. The company facilitates
travel commerce by connecting the world's leading travel providers
with online and offline travel buyers in a proprietary
business-to-business (B2B) travel marketplace.
Travelport has a leadership position in airline merchandising,
hotel content and distribution, car rental, mobile commerce and B2B
payment solutions. The company also provides critical IT
services to airlines, such as shopping, ticketing, departure
control and other solutions. With net revenue of over
$2.4 billion in 2017, Travelport is
headquartered in Langley, UK, has approximately 4,000 staff and is
represented in 180 countries and territories.
About Siris Capital Group, LLC | Siris
Capital
Siris Capital is a leading private equity firm focused on
making control investments in data, telecommunications, technology
and technology-enabled business service companies in North America. Integral to Siris' investment
approach is its partnership with exceptional senior operating
executives, or executive partners, who work with Siris on a
consulting basis to identify, validate and operate investment
opportunities. Their significant involvement allows Siris to
partner with management to add value both operationally and
strategically. To learn more, visit us
at www.siriscapital.com.
About Elliott and Evergreen
Elliott Management Corporation manages two multi-strategy
investment funds which combined have approximately $35 billion of assets under management. Its
flagship fund, Elliott Associates, L.P., was founded in 1977,
making it one of the oldest funds of its kind under continuous
management. The Elliott funds' investors include pension plans,
sovereign wealth funds, endowments, foundations, funds-of-funds,
high net worth individuals and families, and employees of the firm.
This investment is being led by Evergreen Coast Capital, Elliott's
Menlo Park affiliate, which focuses
on technology investing.
Important Information For Investors And Shareholders
Important Information and Where to Find it
The proposed acquisition of Travelport by Siris and Evergreen
will be submitted to the shareholders of Travelport for their
consideration. In connection with the proposed transaction,
Travelport will file with the Securities and Exchange Commission
("SEC") a proxy statement with respect to a special meeting of
Travelport's shareholders to approve the proposed transaction. The
definitive proxy statement will be mailed to Travelport's
shareholders. Travelport also plans to file other documents with
the SEC regarding the proposed transaction. INVESTORS AND SECURITY
HOLDERS OF TRAVELPORT ARE URGED TO READ THE PROXY STATEMENT AND
OTHER RELEVANT DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT TRAVELPORT, SIRIS, EVERGREEN AND THE PROPOSED TRANSACTION.
Investors and shareholders will be able to obtain free copies of
the proxy statement and other documents containing important
information about Travelport, Siris and Evergreen, once such
documents are filed with the SEC, through the website maintained by
the SEC at http://www.sec.gov. Copies of the documents filed with
the SEC by Travelport will be available free of charge on
Travelport's website at ir.travelport.com or by contacting
Travelport's Investor Relations Department at +44 (0)1753 288
686.
Certain Information Regarding Participants
Travelport and certain of its directors, executive officers and
other members of management and employees may be deemed to be
participants in the solicitation of proxies from the shareholders
of Travelport in connection with the proposed transaction.
Information about the directors and executive officers of
Travelport is set forth in its Annual Report on Form 10-K for the
year ended December 31, 2017, which was filed with the SEC on
February 20, 2018, and in its proxy statement for its 2018
annual meeting of shareholders, which was filed with the SEC on
April 25, 2018. To the extent holdings of Travelport
securities have changed since the amounts printed in the proxy
statement for the 2018 Annual Meeting, such changes have been or
will be reflected on Statements of Change in Ownership on Form 4
filed with the SEC. Other information regarding the participants in
the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the proxy statement and other relevant materials to be
filed with the SEC when they become available. These documents can
be obtained free of charge from the sources indicated above.
No Offer or Solicitation
This communication does not constitute a solicitation of proxy,
an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains "forward-looking statements" that
are not limited to historical facts, but reflect Travelport's
current beliefs, expectations or intentions regarding future
events. In some cases, you can identify forward-looking statements
by words such as "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "plan," "predict," "potential,"
"should," "will", and "would" or other similar words. Any
statements that refer to expectations or other characterizations of
future events, circumstances or results are forward-looking
statements. These forward-looking statements include, without
limitation, Travelport's expectations with respect to the costs and
other anticipated financial impacts of the proposed transaction;
future financial and operating results of Travelport; Travelport's
plans, objectives, expectations and intentions with respect to
future operations and services; approval of the proposed
transaction by shareholders; the satisfaction of the closing
conditions to the proposed transaction; and the timing of the
completion of the proposed transaction.
All forward-looking statements involve significant risks and
uncertainties that could cause future results to differ from those
expressed by the forward-looking statements, many of which are
generally outside the control of Travelport and are difficult to
predict. Examples of such risks and uncertainties include, but are
not limited to, (i) the possibility that the proposed
transaction is delayed or does not close, including due to the
failure to receive required shareholder or regulatory approvals,
the taking of governmental action to block the proposed
transaction, the inability to obtain required financing, or the
failure of other closing conditions, and (ii) the possibility that
expected financial results will not be realized, or will not be
realized within the expected time period, because of, among other
things, factors affecting the level of travel activity,
particularly air travel volume, including security concerns,
pandemics, general economic conditions, natural disasters and other
disruptions; general economic and business conditions in the
markets in which Travelport operates, including fluctuations in
currencies, particularly in the U.S. dollar, and the economic
conditions in the Eurozone; pricing, regulatory and other trends in
the travel industry; Travelport's ability to obtain travel provider
inventory from travel providers, such as airlines, hotels, car
rental companies, cruise lines and other travel providers;
Travelport's ability to develop and deliver products and services
that are valuable to travel agencies and travel providers and
generate new revenue streams; maintenance and protection of
Travelport's information technology and intellectual property; the
impact on travel provider capacity and inventory resulting from
consolidation of the airline industry; the impact Travelport's
outstanding indebtedness may have on the way Travelport operates
its business; Travelport's ability to achieve expected cost savings
from Travelport's efforts to improve operational and technology
efficiency, including through Travelport's consolidation of
multiple technology vendors and locations and the centralization of
activities; Travelport's ability to maintain existing relationships
with travel agencies and to enter into new relationships on
acceptable financial and other terms; and Travelport's ability to
grow adjacencies, such as payment and mobile solutions; and the
impact on business conditions worldwide as a result of political
decisions, including the United
Kingdom's decision to leave the European Union.
Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate
indications of the times at, or by which, such performance or
results will be achieved. Forward-looking information is based on
information available at the time and/or management's good faith
belief with respect to future events and is subject to risks and
uncertainties that could cause actual performance or results to
differ materially from those expressed in the statements. The
factors listed in the section captioned "Risk Factors" in
Travelport's Annual Report on Form 10-K for the year ended
December 31, 2017, filed with the SEC on February 20,
2018, Travelport's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2018, filed with the SEC on May 3, 2018,
Travelport's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2018, filed with the SEC on August 2, 2018, and
Travelport's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2018, filed with the
SEC on November 1, 2018, provide
examples of risks, uncertainties and events that may cause actual
results to differ materially from the expectations described in the
forward-looking statements. You should be aware that the occurrence
of the events described in these risk factors and elsewhere could
have an adverse effect on Travelport's business, results of
operations, financial position and cash flows.
Forward-looking statements speak only as of the date the
statements are made. Travelport assumes no obligation to update
forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting forward-looking
information except to the extent required by applicable securities
laws. If Travelport does update one or more forward-looking
statements, no inference should be drawn that it will make
additional updates with respect thereto or with respect to other
forward-looking statements. For any forward-looking statements
contained in any document, Travelport claims the protection of the
safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
Non-GAAP Financial Measures
Adjusted EBITDA is defined as Adjusted Net Income (Loss)
excluding depreciation and amortization of property and equipment,
amortization of customer loyalty payments, interest expense, net
(excluding unrealized gains (losses) on interest rate derivative
instruments), components of net periodic pension and
post-retirement benefit costs other than service cost and related
income taxes.
Adjusted Net Income (Loss) is defined as net income (loss)
excluding amortization of acquired intangible assets, gain (loss)
on early extinguishment of debt, and items that are excluded under
our debt covenants, such as, income (loss) from discontinued
operations, gain (loss) on sale of subsidiary, non-cash
equity-based compensation, certain corporate and restructuring
costs, non-cash impairment of long-lived assets, certain litigation
and related costs, and other non-cash items such as unrealized
foreign currency gains (losses) on earnings hedges, and unrealized
gains (losses) on interest rate derivative instruments, along with
any income tax related to these exclusions. Tax impacts not related
to core operations have also been excluded.
Adjusted Income (Loss) per Share – Diluted is defined as
Adjusted Net Income (Loss) for the period divided by the weighted
average number of dilutive common shares.
Free Cash Flow is defined as net cash provided by (used in)
operating activities, less cash used for additions to property and
equipment.
The Company utilizes non – GAAP (or adjusted) financial
measures, including Adjusted EBITDA, Adjusted Net Income (Loss) and
Adjusted Net Income (Loss) per Share – diluted, to provide useful
supplemental information to assist investors in understanding and
assessing its performance and financial results on the same basis
that management uses internally. These adjusted financial measures
provide investors greater transparency with respect to the key
metrics used by management to evaluate Travelport's core
operations, forecast future results, determine future capital
investment allocations and understand business trends within the
industry. Adjusted Net Income (Loss) per Share – diluted is also
used by Travelport's Board of Directors to determine incentive
compensation for future periods. Management believes the adjusted
financial measures assist investors in the comparison of financial
results between periods as such measures exclude certain items that
management believes are not reflective of Travelport's core
operating performance consistent with how management reviews the
business.
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Share
– diluted and Adjusted EBITDA are supplemental measures of
operating performance that do not represent, and should not be
considered as, alternatives to net income (loss), or net income
(loss) per share – diluted, as determined under U.S. GAAP. In
addition, these measures may not be comparable to similarly named
measures used by other companies.
The Company believes Adjusted Income (Loss) per Share – diluted
is a useful measure for its investors as it represents, on a per
share basis, the company's consolidated results, taking into
account depreciation and amortization on property and equipment and
amortization of customer loyalty payments, as well as other items
which are not allocated to the operating businesses such as
interest expense (excluding unrealized gains (losses) on interest
rate derivative instruments), certain components of net periodic
pension and post-retirement benefit costs and related income taxes
but excluding the effects of certain expenses not directly tied to
the core operations of the company's businesses. Adjusted
Income (Loss) per Share – diluted has similar limitations as
Adjusted Net Income (Loss) and Adjusted EBITDA and may not be
comparable to similarly named measures used by other companies. In
addition, Adjusted Net Income (Loss) does not include all items
that affect the company's net income (loss) and net income (loss)
per share for the period. Therefore, the company believes it
is important to evaluate these measures along with its consolidated
statements of operations.
The Company believes its important measure of liquidity is Free
Cash Flow. This measure is a useful indicator of the company's
ability to generate cash to meet its liquidity
demands. Travelport uses Free Cash Flow to conduct and
evaluate its operating liquidity. The Company believes it typically
presents an alternate measure of cash flows since purchases of
property and equipment are a necessary component of its ongoing
operations and provides useful information regarding how cash
provided by operating activities compares to the property and
equipment investments required to maintain and grow its platform.
Travelport believes Free Cash Flow provides investors with an
understanding of how assets are performing and measures
management's effectiveness in managing cash. Free Cash Flow
is a non – GAAP measure and may not be comparable to similarly
named measures used by other companies. This measure has
limitation in that it does not represent the total increase or
decrease in the cash balance for the period, nor does it represent
residual cash flow for discretionary expenditures. This measure
should not be considered as a measure of liquidity or cash flows
from operations as determined under U.S. GAAP.
These non–GAAP financial measures have limitations as analytical
tools and should not be considered in isolation or as a substitute
for analysis of Travelport's results as reported under U.S.
GAAP.
Contacts
Travelport:
Investors
Majid Nazir
Head of Investor Relations
Tel: +44 (0)1753 288 857
majid.nazir@travelport.com
Peter Russell
Group Treasurer
Tel: +44 (0)1753 288 248
peter.russell@travelport.com
Media
Julian Eccles
Vice President, PR and Communications
Tel: +44 (0)7720 409 374
julian.eccles@travelport.com
Anna Davies
Head of Global Communications
Tel: +44 (0)7787 501 908
anna.davies@travelport.com
Michael Flaherty
Senior Vice President, Gladstone Place Partners
Tel: +1 646 668 6852
mflaherty@gladstoneplace.com
Siris:
Dana Gorman
Managing Director, Abernathy
MacGregor
Tel: +1 212 371 5999
dtg@abmac.com
Blair Hennessy
Senior Vice President, Abernathy
MacGregor
Tel: +1 212 371 5999
bth@abmac.com
Elliott/Evergreen:
Stephen Spruiell
Tel: +1 212 478 2017
sspruiell@elliottmgmt.com
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SOURCE Travelport Worldwide Limited