TripAdvisor has strong liquidity after Q1 exchangeable debenture sale

By Devika Patel

Knoxville, Tenn., May 7 – TripAdvisor Inc. reported strong liquidity following a $345 million sale of exchangeable debentures in the first quarter.

“On the liquidity front, in Q1, we completed an opportunistic convertible debt capital raise, which further fortified our balance sheet,” chief financial officer Ernst J. Teunissen said on the company’s first quarter ended March 31 earnings conference call on Friday.

“With $674 million of cash on our balance sheet at the end of the last quarter, plus an undrawn credit facility for which covenant flexibility was achieved last year, as well as enhanced operating leverage as revenue comes back, we believe we are in a strong liquidity position,” he said.

As of March 31, 2021, Tripadvisor had $674 million of cash and cash equivalents, an increase of $256 million from Dec. 31, 2020, with nearly $500 million in available borrowing capacity under its revolving credit facility.

Long-term debt was $831 million as of March 31, 2021, compared to $491 million as of Dec. 31, 2020.

On March 23, Liberty TripAdvisor Holdings, Inc. priced $300 million of exchangeable debentures due 2051 after the market close at par with a coupon of 0.5% and an initial exchange premium of 30%.

Pricing came at the cheap end of talk for a coupon of 0.25% to 0.5% and an initial exchange premium of 30% to 35%.

The debentures will be issued by Liberty TripAdvisor Holdings and exchangeable for TripAdvisor Inc. common stock.

BofA Securities Inc. (lead left), Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC were active bookrunners for the Rule 144A offering, which had a $30 million greenshoe, which was exercised in full on March 26, lifting the total deal size to $345 million.

The debentures are non-callable until March 27, 2025 and then freely callable.

They are putable on March 27, 2025.

Proceeds will be used to fund the repurchase of the company’s 8% series A cumulative redeemable preferred stock in a private transaction with Certares Management LLC.

Liberty TripAdvisor will repurchase approximately 42% of the preferred shares held by Certares for an aggregate value of $373 million.

The repurchase will be funded by $252 million in net proceeds and $92 million or 1,713,859 shares of TripAdvisor common stock.

Liberty TripAdvisor is the holding company for its subsidiary TripAdvisor. TripAdvisor is a Needham, Mass.-based online travel platform.

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