Travelport’s parent company, Travelport Holdings Limited, has won support to alter the terms of its PIK (payment-in-kind) loan, effectively giving the company until 2016 to repay its debts.
The company threatened to file for Chapter 11 bankruptcy protection last week if lenders did not agree unanimously to a restructuring of its debt.
But the company has since announced that it has successfully obtained the consents to amend the terms of Travelport Holdings’ unsecured PIK term loans, including arrangements that extend the maturity date from March 27, 2012 until December 1, 2016.
Holders of Travelport Limited’s senior secured credit agreement also consented to certain amendments in connection with the proposed restructuring, with approximately 99,3% in aggregate principal amount of the loans outstanding approving the amendment.
“We are very pleased that Travelport Limited and our parent company have received overwhelming support for the modification and extension of its credit facilities,” said Gordon Wilson, president and ceo of Travelport Limited. “With the consents obtained, Travelport Limited will continue to have the financial flexibility to execute our growth strategy. We remain focused on expanding and improving our product and technical platform and building on our position as one of the world’s leading travel content aggregators and transaction processing providers.”
The amendment to the PIK term loans is expected to be consummated today, October 3.
What is Chapter 11?
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganisation under the bankruptcy laws of the United States. When a business is unable to service its debt or pay its creditors, the business can file with a federal bankruptcy court for protection under Chapter 11.
As an alternative to Chapter 7 (where the business ceases operations, a trustee sells all of its assets and then distributes the proceeds to its creditors and any residual amount is returned to the owners of the company) Chapter 11, in most instances, allows the debtor to remain in control of its business operations but is subject to the oversight and jurisdiction of the court.
The debtor/s involved may propose the repayment and reorganisation plan or, after a period of time, the creditors may propose a plan as well. The plan may allow the debtor to cancel contracts. The value of shares owned if the stock is publicly traded may also be cancelled, leaving the shareholders with nothing. Any plan that is created must be approved by the creditors.
A trustee is involved throughout the reorganisation process. The trustee will help to ensure that priority claims are paid, that assets are managed properly, and that the reorganisation proceeds as it should. If the owners are not managing the assets properly, the trustee may take more control or someone else may be put in charge of the assets.
*source: FreeAdvice.com
Travelport parent wins backing to extend debt
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