Moody's may downgrade Sabre

Moody's Investors Service said the conclusion of its review for possible downgrade of Sabre Holdings Corp.'s $400 million senior unsecured notes due 2011 and $400 million senior unsecured notes due 2016 remains subject to the receipt of stockholder approvals, which is expected to occur on March 23, and other closing conditions related to the company's proposed $5.4 billion acquisition by Silver Lake Partners and Texas Pacific Group, including the assumption of $700 million in net debt.

Based on the company's estimated capital structure pro forma for the transaction, the agency said it would likely downgrade the existing notes to Caa1 from Baa3, assign a B2 corporate rating to Sabre Holdings and assign Ba3 ratings to Sabre Inc.'s proposed $500 million first-lien revolving credit facility and $2.7 billion first-lien term loan and a B3 rating to its proposed $300 million second-lien term loan facility.

The agency estimated that once the transaction is consummated, the company's debt-to-EBITDA ratio would increase to 5.9x, factoring in anticipated cost savings, or to 7.8x, without the anticipated cost savings. The anticipated lower notching for the notes is based on information included in the company's recent proxy filing, whereby a pledge of any tangible U.S. property in excess of 1% of consolidated net assets is excluded from the security package of the proposed new credit facilities and, as a result, the equal and ratable security requirement of the existing $800 million notes does not get triggered, the agency said.

At the same time, Moody's believes that Sabre's strong management team and 2006 contract negotiations with travel suppliers, including the major U.S. airlines, will continue to support Sabre's leading industry position within the travel service markets.

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