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Rating Action:

Moody's affirms Travelport's ratings and assigns a (P) B3 to proposed new notes

Global Credit Research - 12 Aug 2010

London, 12 August 2010 -- Moody's has today affirmed the B2 corporate family rating (CFR) and probability of default rating (PDR) of Travelport LLC (Travelport). The Ba3 senior secured, the B3 senior unsecured and Caa1 subordinated instrument ratings have also been affirmed; the outlook remains stable. Concurrently, Moody's has assigned a provisional (P) B3 rating to Travelport's proposed senior unsecured notes due in 2016.

Today's action follows the company's announcement that it plans to issue a new USD250 million senior unsecured private offering with a 6-year maturity which will be partly used to repay approximately USD150 million in existing secured debt. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody's preliminary credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody's will endeavour to assign a definitive rating to the notes. A definitive rating may differ from a provisional rating.

Moody's expects that this proposed transaction will have limited impact on the company's metrics. Nevertheless, the company's gross leverage ratio remains above the target that Moody's had indicated in its previous publications; we expect it to trend towards 6.5x (as adjusted by Moody's and including the PIK notes). Moody's estimates that as of June 2010, this ratio was at 7.1x which positions the company weakly in its rating category. To maintain the current ratings and outlook, we would expect Travelport to continue its efforts to improve its financial profile and reduce its leverage ratio towards our target in the short-term.

Furthermore, Moody's notes that currently there is very limited headroom under the net leverage covenant included in Travelport's senior secured credit facilities (actual 5.48x versus 6x required as of June 2010). In addition this covenant will step-down to 5.75x and to 5.5x as of September 2010 and December 2010, respectively, which is likely to further reduce the level of headroom. As such, our current ratings and outlook factor in the expectation that the company will take appropriate actions to rebuild headroom to more comfortable levels and avoid any risks of a potential breach of its financial covenant within the coming quarters.

As of June 2010 the company's liquidity consisted of USD167 million in cash, in addition to USD240 million of availability under its existing revolving credit facility and it is further supported by the company's 48% stake in Orbitz (rated B2 with a stable outlook). Moody's further notes that the company generated free cash flow of approximately USD140 million on a last 12 months' basis to end June 2010 and has no meaningful near-term debt maturities.

The stable outlook reflects Moody's expectation that the company's metrics will improve and that it will increase its headroom under the net leverage covenant in the near term in order to enhance its financial flexibility. While we continue to believe that the company's earnings remain exposed to the volatile travel sector, we also note IATA's forecasts of a recovery in passenger numbers in international air travel in 2010, albeit with yields remaining at a low level. This should be beneficial for Travelport, whose earnings profile is more exposed to air passenger transaction volumes than yields. A failure to improve metrics over the short to medium term with gross leverage not trending towards 6.5x (as adjusted by Moody's and including the PIK notes) during the course of 2010, or further concerns developing over liquidity, would likely be negative for the rating or outlook.

While not expected in the medium term, positive pressure could develop if the company were able to sustain leverage below 5.5x with a strong liquidity profile.

The following ratings/assessments are affirmed by today's action with stable outlook:

- Corporate Family Rating at B2;

- Probability of Default Rating at B2;

- USD270 million revolving credit facility due 2012 at Ba3 (LGD 2, 25%);

- USD150 million synthetic letter of credit facility due 2013 at Ba3 (LGD 2, 25%);

- USD2.19 billion term loan facility due 2013 at Ba3 (LGD 2, 25%);

- USD150 million term loan C facility due 2013 at Ba3 (LGD 2, 25%);

- EUR235 million senior unsecured notes due 2014 at B3 (LGD 5, 74%);

- USD150 million floating rate senior unsecured notes due 2014 at B3 (LGD 5, 74%);

- USD450 million fixed senior unsecured notes due 2014 at B3 (LGD 5, 74%);

- USD300 million subordinated notes due 2016 at Caa1 (LGD 5, 88%);

- EUR160 million subordinated notes due 2016 at Caa1 (LGD 5, 88%).

The following provisional rating is assigned:

- USD250 million senior unsecured notes due 2016 at (P) B3 (LGD 5, 71%).

The principal methodology used in rating Travelport was Moody's Global Business and Consumer Service Industry, published in August 2007 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. The last rating action for Travelport LLC was on 12 February 2010, when the ratings were confirmed following the company's announcement that it had decided not to proceed with its planned IPO to raise c.USD2.0 billion in proceeds.

Headquartered in New York, Travelport is a leading provider of transaction processing services to the travel industry through its two main business networks, the global distribution system ("GDS") business, which includes the Group's airline information technology solutions business, and the Gullivers Travel Associates ("GTA") business. During fiscal year ending December 2009, the company generated revenues of c.USD2.2 billion.

London
Richard Morawetz
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

London
Paloma San Valentin
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom

Moody's affirms Travelport's ratings and assigns a (P) B3 to proposed new notes
No Related Data.
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