Travel giant CWT files for Chapter 11

December 2021 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

December 2021 Issue

To weather the financial storm caused by the COVID-19 pandemic, global travel management company CWT has filed for Chapter 11 bankruptcy protection in the US in order to complete a recently announced $1.5bn refinancing deal.

CWT’s Chapter 11 filing is the latest in a series of bankruptcy filings and restructuring across the travel industry, including car rental giant Hertz, US educational travel specialist Worldstrides and a number of airlines.

“We plan to use a ‘pre-packaged’ court-supervised Chapter 11 process to implement the refinancing deal on an expedited basis while we continue operating normally,” said CWT in a statement. “The deal with our financial partners will significantly strengthen our financial position, provide substantial liquidity and reduce our debt by approximately 50 percent. We look forward to moving ahead as a fundamentally stronger company.”

CWT’s refinancing deal with financial stakeholders, including Barings LLC among others, represents over 90 percent of CWT’s outstanding debt to recapitalise the business and further strengthen its financial position as the recovery in business travel continues to gain momentum in key markets around the world.

Key terms of the agreement include: (i) adding $350m of new equity capital into the business; (ii) eliminating almost $900m of debt by replacing CWT’s existing $1.5bn in debt with new first lien debt of $625m issued at market rates and a new undrawn revolving credit facility; (iii) providing CWT with substantial long-term liquidity through the resulting balance sheet cash and new revolving credit facility; and (v) providing for all business partners and other providers of goods and services to CWT to be paid in full.

“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, chief executive of CWT, in a statement in September. “This is an important and exciting time for travel, as 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,” she continued. “We are pleased to be moving ahead with overwhelming support from our financial partners, who will become CWT’s new majority owners.”

The company added that the Chapter 11 process and restructuring deal will enable it to move beyond the pandemic, accelerate investments that create industry-leading experiences for its clients and travellers, and position CWT to benefit from the recovery already underway.

CWT expects to exit the Chapter 11 bankruptcy protection process by the end of October 2021.

“Our focus remains on providing best-in-class travel experiences for our customers and travellers while maintaining strong relationships with our partners, suppliers and other stakeholders,” added Ms Frymire. “With travel demand now increasing, the actions we are taking will enable us to build on our industry-leading position.”

Fraser Tennant