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Rating Action:

Moody's assigns B2 to TravelClick's first lien credit facility --all other ratings remain unchanged

23 Mar 2018

New York, March 23, 2018 -- Moody's Investors Service ("Moody's") assigned B2 ratings to TravelClick, Inc. ("TravelClick") first lien senior secured credit facility, consisting of a proposed upsized and repriced $480 million first lien term loan ($446 million outstanding and $34 million incremental term loan) and new $30 million revolving credit facility. The proposed changes to the first lien credit facility have no immediate impact on the company's B3 Corporate Family Rating (CFR), B3-PD Probability of Default Rating, Caa2 rating on the second lien senior secured term loan or the stable rating outlook.

The proceeds from the incremental $34 million first lien term loan will be used to repay a portion of its more expensive second lien term loan and pay transaction fees and expenses. Additionally, TravelClick is expected to (1) re-price its first lien term loan by reducing the applicable margin rate by 50 basis points to LIBOR + 350 with a 1% floor; (2) extend its $30 million revolving credit facility by 18 months to November 2020; and (3) reset the financial covenant level on the revolving credit facility to 35% cushion.

The transaction is leverage neutral and is expected to result in approximately $3-4 million of annual interest savings that will modestly improve the company's free cash flow. TravelClick's debt-to-EBITDA (Moody's adjusted, net of capitalized software costs) remains very high, estimated at 7.7 times at December 31, 2017. Moody's projects the company will generate modestly positive free cash flow of $5-10 million over the next 12-15 months and maintain debt-to-EBITDA leverage above 7.5 times in 2018.

Moody's assigned the following ratings:

Issuer: TravelCLICK, Inc. :

---Proposed $30 million first lien senior secured revolving credit facility due 2020, assigned B2 (LGD3)

---Proposed $480 million first lien senior secured term loan due 2021, assigned B2 (LGD3)

The following ratings remain unchanged:

Issuer: TravelCLICK, Inc.:

---Corporate Family Rating, unchanged at B3

---Probability of Default Rating, unchanged at B3-PD

---Existing $449.4 million ($446 million outstanding) first lien senior secured term loan due 2021, unchanged at B2(LGD3) and to be withdrawn after close of transaction

---Existing $30 million first lien senior secured revolving credit facility due 2019, unchanged at B2(LGD3) and to be withdrawn after close of transaction

---$100 million ($66 million outstanding following close of transaction) second lien senior secured term loan due 2021, unchanged at at Caa2 (LGD5)

--Outlook, Stable

The ratings are subject to the execution of the transaction as currently proposed and Moody's review of final documentation. The instrument ratings are subject to change if the proposed capital structured is modified.

Please also note that all ratings that had previously resided at TCH-2 Holdings, LLC are now assigned to TravelClick, Inc. A merger between TCH-2 Holdings, LLC and TravelClick, Inc. took place on December 31, 2014 but Moody's did not reassign the ratings at that time.

RATINGS RATIONALE

TravelClick's B3 CFR reflects the company's high financial leverage, small scale relative to other B3-rated issuers in the business and consumer services sector, as well as the cyclical and highly competitive nature of the lodging industry (the company's end market) and its reliance on certain strategic partners. Positive rating consideration is given to favorable though moderating lodging industry growth trends, TravelClick's leading position in the hotel technology segment, its highly recurring revenue model with strong renewal rates and a diverse customer base consisting of a broad distribution of geographies -- notable for a company of its size. Moody's assumes that the operating environment will remain favorable, including moderate growth in the U.S. economy and stable exchange rates. Moody's also expects TravelClick's organic revenue growth at or above U.S. lodging industry's revenue per available room (RevPar) growth of 1%-3% over the next 12 months, and that the company will continue to seek opportunistic acquisitions to supplement its organic growth. The rating is further supported by expectation that the company will maintain good liquidity.

The stable rating outlook reflects Moody's view that TravelClick will continue to grow its revenue and earnings from new and existing customers and gradually deleverage over time. Moody's also expects that the company will maintain good liquidity.

Ratings could be upgraded if TravelClick continues to grow EBITDA and debt is reduced meaningfully, enabling the company to achieve and maintain Moody's adjusted debt-to-EBITDA of below 5.5 times and Moody's adjusted free cash flow to debt of 10%.

Ratings could be downgraded if the company experiences top-line and earnings pressure such that Moody's adjusted debt-to-EBITDA leverage remains elevated and Moody's adjusted (EBITDA-Capex)/interest expense approaches 1.0 time, or if TravelClick's operating margin or liquidity were to deteriorate.

Ratings could be downgraded if the company experiences top-line and earnings pressure such that Moody's adjusted debt-to-EBITDA leverage remains elevated and Moody's adjusted (EBITDA-Capex)/interest expense approaches 1.0 time, or if TravelClick's operating margin or liquidity were to deteriorate.

The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

TravelClick, headquartered in New York City, is a leading provider of reservation solutions, business intelligence and digital marketing to independent and chain hotels worldwide. TravelClick's offering include: (i) Business Intelligence Solutions that provide customers with competitive market date; (ii) Digital Marketing Solutions that enable customers to market their properties directly to consumers and travel agents; and (iii) Reservation Services which provide a web-based Central Reservation System, including a web booking engine. The company generated revenue of approximately 373 million in 2017. The company has been majority owned by Thoma Bravo since May 2014.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Oleg Markin
Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Lenny J. Ajzenman
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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