Amadeus Sweetens Loan Terms, Paves Way for IPO

LONDON (Reuters) – Travel reservations group Amadeus has improved the terms of a loan amendment that will clear the way towards an expected initial public offering, several sources close to the deal said on Wednesday.

Existing loan lenders to the private equity-controlled firm sought sweetened terms in exchange for their support ahead of possible listing, after German chemicals distributor Brenntag was forced to improve its amendment. [ID:nGEE5BA0XR]

Amadeus is now offering to increase an interest margin uplift by another 25 basis points (bps) to 150 bps, bringing interest margins to around 375-400 bps over EURIBOR.

A participation fee has also been improved by 25 bps to 75 bps, while banks committing to the changes by close of business on Dec. 16 will receive an additional 25 bps ‘early bird’ fee, the sources said.

A spokesman for Amadeus declined to comment.

Two other incentives have been put in place. Amadeus faces a 25 bps reduction in interest margins if its net debt to EBITDA ratio falls under 2.5 times.

The changes also include a tightening of future dividend policy to offer lenders greater protection. Dividends have been limited to 75 percent of net income, although this restriction falls away if leverage slips under 2.5 times.

“This allows the company to offer a dividend yield that will be acceptable to (equity) market and offers downside protection to banks,” the banker said.

Previously, Amadeus was aiming to pay a maximum of 200 million euros of dividend per year, but the clause could be dropped if leverage slid under three times.

Two thirds of the lenders are now expected to approve the loan amendments ahead of the final deadline.

“It will get through now it ticks all the boxes,” one investor said.

Amadeus has not officially announced plans to go public, but appointed Goldman Sachs, JP Morgan and Morgan Stanley to advise on the flotation in October.

Some 910 million euros of proceeds from the IPO will go towards reducing the group’s total net debt, which will reduce leverage to less than 3.5 times from around 3.9 times currently.

Amadeus is controlled by private equity firms BC Partners [BCPRT.UL] and Cinven [CINV.UL] with 52.8 percent, Air France (AIRF.PA) with 23.14 percent and Iberia (IBLA.MC) and Lufthansa (LHAG.DE) with 11.57 percent each.

(Reporting by Zaida Espana; editing by Simon Jessop)