01—Abstract
Summary
Summary of the 8-K filed September 21, 2017. Cited figures are marked; the original filing is the authoritative source.
Expedia, Inc. announced on September 21, 2017, the successful completion of a private placement of $1 billiona in senior unsecured notes due February 2028.
These notes carry a coupon rate of 3.800% and are guaranteed by certain domestic subsidiaries. The net proceeds, approximately $991 millionb after expenses, are designated for general corporate purposes, including debt repayment (specifically mentioning the 7.456% senior notes due 2018), working capital, capital expenditures, and potential acquisitions. This debt issuance provides Expedia with significant financial flexibility and aims to optimize its capital structure.
Investors should note the unsecured nature of the notes, ranking equally with other existing and future unsecured obligations, and the full and unconditional guarantees from subsidiary guarantors. The company also entered into a registration rights agreement requiring it to register these notes for resale or conduct an exchange offer within 365 days, with provisions for additional interest payments in case of default.
02—Key points
Key Highlights
- Expedia completed a $1 billion private placement of 3.800% senior unsecured notes due February 2028.
- Net proceeds from the issuance are approximately $991 million.
- Proceeds will be used for general corporate purposes, including debt repayment and working capital.
- The notes are senior unsecured obligations and are guaranteed by subsidiary guarantors.
- The company entered into a registration rights agreement to register the notes within 365 days.
- Failure to meet registration obligations may result in additional interest payments of 0.25% per annum.
- The notes can be redeemed by Expedia under specific terms, including a make-whole premium before maturity and at par thereafter.
03—Questions
Frequently Asked Questions
What is the primary purpose of this debt issuance?
The primary purpose is to raise $1 billion for general corporate purposes, which include repaying existing indebtedness (like the 7.456% senior notes due 2018), funding working capital, capital expenditures, and potential acquisitions. This provides Expedia with financial flexibility and helps in managing its capital structure.
What is the credit risk associated with these notes?
The notes are classified as senior unsecured obligations, meaning they rank equally with other unsecured and unsubordinated debt of Expedia. They are fully and unconditionally guaranteed by subsidiary guarantors, meaning these subsidiaries are also primarily liable. However, they are not backed by specific collateral, which presents a higher risk compared to secured debt.
What are the implications of the registration rights agreement?
The registration rights agreement obligates Expedia to either file a registration statement for an exchange offer of the notes or a shelf registration statement within 365 days. This aims to provide liquidity to the initial purchasers by allowing them to resell the notes more freely. If Expedia fails to meet these obligations, it must pay additional interest of 0.25% per annum to noteholders until the default is cured.
Under what conditions can Expedia redeem these notes early?
Expedia can redeem some or all of the notes prior to November 15, 2027, by paying a 'make-whole' premium plus accrued interest. On or after November 15, 2027, the company can redeem the notes at par value plus accrued interest. Additionally, upon certain change of control events, Expedia is obligated to offer to repurchase the notes at 101% of their principal amount plus accrued interest.
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