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Carlson Will Borrow the $360 Million It Needs to Buy Stake From JPMorgan

Jun 24, 2014 4:00 am

Skift Take

Carlson likely sees the market moving up with a speed that makes the purchase at this point the smart move.

— NewsCred

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A unit of Carlson, the global hospitality and travel company that owns Radisson Hotels, plans to borrow $360 million to buy out JPMorgan Chase & Co.’s stake in Carlson Wagonlit Travel.

The company plans to issue five-year pay-in-kind notes through Carlson Travel Holdings Inc. that allow the borrower to pay interest with additional debt, it said in a statement today.

Carlson is buying the 45 percent stake in the travel management firm it doesn’t already own from JPMorgan, taking full control of a company that employs about 19,000 people in more than 150 countries and territories, the company said in a separate statement.

Moody’s Investors Service assigned a provisional Caa1 rating to the proposed PIK bonds, and placed Carlson Wagonlit’s credit of B1 on review for downgrade, saying the transaction will pressure the company’s leverage, ability to cover interest payments, and cash flow generation. The company’s earnings before interest, taxes, depreciation and amortization, or Ebitda, declined to $196 million from $249 million in fiscal year 2013, Moody’s said in a statement.

To contact the reporter on this story: Adam Janofsky in New York at ajanofsky4@bloomberg.net. To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net. 

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