Travelport has warned its parent company Travelport Holdings will seek Chapter 11 bankruptcy protection in the US if it cannot win the unanimous consent of lenders to extend the repayment of loans due next March
Travelport parent ‘could seek bankruptcy protection’ in US
Travelport has warned its parent company Travelport Holdings will seek Chapter 11 bankruptcy protection in the US if it cannot win the unanimous consent of lenders to extend the repayment of loans due next March.
The technology company is seeking to extend repayment of loans worth $715 million (£447 million) from March 2012 to 2016.
Travelport, owner of global distribution systems (GDSs) Worldspan and Galileo, announced on Monday that holders of “a majority in aggregate principal amount” had consented to amendments to the loans in line with its proposal.
In a statement, the company said: “The solicitation of consents of loan holders is ongoing.”
The company insisted that Travelport Ltd, owner of Worldspan and Galileo, would not be a party to the restructure or Chapter 11 filing and its business operations would not be affected.
A Travelport spokeswoman said: “It won’t impact on Travelport Ltd if we go down the route of a Chapter 11 filing.”
Travelport informed the US Securities and Exchange Commission (SEC) last week that Travelport Holidngs – one of its parent companies – would take steps to restructure under Chapter 11 if it did not get the unanimous consent of lenders.
The company told the SEC that “despite recent improvements in profitability” Travelport was “currently facing obstacles as a result of the global economic downturn, as well as market and industry-wide pressures”.
Travelport revealed it does not expect to make a profit until 2015 at the earliest, owing to a “prolonged and substantial decrease in global travel volume, particularly air travel”.
Credit-rating agency Standard & Poor’s cut its rating on Travelport Holdings and Travelport Ltd following the company’s statement to the SEC, saying: “There is a real possibility of a conventional default. . . This is underlined by Travelport’s open notice that Travelport Holdings could commence Chapter 11 bankruptcy proceedings in the US.”
The GDS owner is embroiled in a long-running legal battle in the US with American Airlines which has led the companies to file anti-trust lawsuits against one another.
