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S&P lowers Expedia to junk
Standard & Poor's said it lowered its ratings on Expedia Inc. to BB+ from BBB- and placed them on CreditWatch with negative implications, indicating the potential for further negative rating movement.
The agency said that the rating action followed the announcement that Expedia intends to repurchase up to 116.7 million shares in a tender offer at not less than $27.50 and not greater than $30.00 per share, which represents a dramatic change in Expedia's previously investment-grade financial policy.
The 116.7 million shares represent about 42% of the number of common stock outstanding, excluding class B common stock, S&P said.
Though business performance during first quarter of 2007 was good, with revenue up 11% and EBITDA up 19% and some initial indications of recovery at Expedia.com, the business still faces some pressure from its travel suppliers, the agency added.
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