01—Abstract
Summary
Summary of the 8-K filed May 5, 2020. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) filed an 8-K on May 5, 2020, detailing significant financing and corporate governance updates.
The company successfully completed a private placement of $2.75 billiona in senior unsecured notes, comprising $2 billion of 6.250% notes and $750 million of 7.000% notes, both maturing in May 2025. The net proceeds are earmarked for general corporate purposes, potentially including the repayment of existing debt. This move provides the company with substantial liquidity during a challenging economic period.
In conjunction with the debt issuance, Expedia also amended its revolving credit facility, notably suspending the maximum leverage ratio covenant until the end of 2021 and making other adjustments to financial covenants. Furthermore, the company announced the closing of a previously disclosed investment from affiliates of Apollo Global Management and Silver Lake Group, which included the issuance of Series A Preferred Stock and warrants.
As a result of these investments, David Sambur and Greg Mondre were appointed to the Board of Directors. These actions collectively represent a strategic effort by Expedia to strengthen its financial position and adapt its capital structure.
02—Key points
Key Highlights
- Expedia Group completed a $2.75 billion offering of senior unsecured notes (6.250% and 7.000% due May 2025) on May 5, 2020.
- Net proceeds from the notes offering are approximately $2,714 million and are intended for general corporate purposes, potentially including debt repayment.
- The company amended its revolving credit facility, suspending the maximum leverage ratio covenant until December 31, 2021, and adjusting other covenants.
- The credit facility was amended to initially total $2 billion and matures on May 31, 2023.
- Expedia completed its previously announced investment from affiliates of Apollo Global Management and Silver Lake Group, involving Series A Preferred Stock and warrants.
- David Sambur (Apollo) and Greg Mondre (Silver Lake) were appointed to the Board of Directors.
- The company established Series A Preferred Stock with specific terms outlined in a Certificate of Designations.
03—Questions
Frequently Asked Questions
What was the primary purpose of the notes offering?
Expedia Group issued $2.75 billion in senior unsecured notes to raise capital for general corporate purposes. This may include repaying existing debt, such as the 5.95% Senior Notes due 2020, thereby strengthening its liquidity position.
How did the credit facility amendments impact Expedia's financial covenants?
The amendments to the revolving credit facility suspended the maximum leverage ratio covenant until December 31, 2021, provided a temporary increase in the permissible leverage ratio thereafter, and eliminated the minimum consolidated EBITDA to cash interest expense ratio covenant. A minimum liquidity covenant was added. These changes offer greater financial flexibility during a period of economic uncertainty.
Who are the new members appointed to Expedia's Board of Directors and why?
David Sambur, representing Apollo Global Management, and Greg Mondre, representing Silver Lake Group, were appointed to the Board of Directors. Their appointments are a result of the company's investment agreements with these firms, reflecting their significant stake and partnership with Expedia.
What is the significance of the Series A Preferred Stock and warrants?
The Series A Preferred Stock and warrants were issued as part of the investment from Apollo and Silver Lake. The preferred stock establishes a new class of equity with specific terms, while the warrants provide these investors with potential future upside in Expedia's common stock, indicating their long-term confidence in the company.
04—Continue