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14 Dec 2010
Approximately $93 million of rated debt affected
New York, December 14, 2010 -- Moody's Investors Service today upgraded to Ba2 from Ba3 the rating on
TravelCLICK Inc.'s ("TravelCLICK") senior secured credit facility.
This rating action reflects a revised estimate of expected loss,
consistent with Moody's Loss Given Default methodology, resulting
from $12 million in permanent repayment of the term loan's
balance. At September 30, 2010, TravelCLICK has reduced
the term loan to $78 million from an original face amount of $90
Concurrently, Moody's affirmed the B1 Corporate Family Rating ("CFR")
and Probability of Default Rating. Contrary to fluctuating trends
in the lodging industry, TravelCLICK has reported fairly stable
consolidated revenues and earnings over the past couple years.
An industry-wide trend towards a greater percentage of bookings
made directly on hotel websites benefited TravelCLICK's overall
reservation system volumes and partially offset the negative impact of
customers' lower average occupancy and Average Daily Room ("ADR")
rates. Additionally, the company has reduced debt and continues
to maintain a good liquidity profile. Financial leverage of about
3.7 times at September 30, 2010 is considered strong for
the rating category and Moody's expects interest coverage and free cash
flow to remain solid. However, the B1 CFR continues to be
constrained by the company's relatively modest revenue size,
reliance on strategic partners, and the vulnerability of revenues
to highly cyclical demand within the luxury and upper upscale hotel industry.
The stable outlook reflects Moody's expectations that TravelCLICK will
experience modest revenue growth in the near-term as customer occupancy
and ADR rates continue to rebound, particularly within the business
traveler segment. While scheduled step-downs in the maximum
leverage covenant in 2011 may cause covenant tightness, Moody's
anticipates that the company will use its cash balance, if necessary,
to further reduce the outstanding balance on the term loan and maintain
compliance with its covenants.
Due to TravelCLICK's relatively modest size and vulnerability to
end-market demand cyclicality, it is unlikely the CFR will
be upgraded in the near term. However, the ratings or outlook
could be raised if TravelCLICK significantly expands its revenue base
and permanently reduces indebtedness such that financial leverage and
free cash flow to debt can be sustained at about 3 times and above 10%,
respectively. The outlook or ratings could be pressured if there
is a material change in TravelCLICK's capital structure or strategic
alliances, or if the company's profitability or liquidity
profile deteriorates. Specifically, financial leverage and
free cash flow to debt approaching 5 times and below 4%,
respectively, could lead to negative ratings pressure.
Moody's upgraded the following ratings:
$15 million senior secured revolver due December 2012, to
Ba2 (LGD2, 29%) from Ba3 (LGD2, 29%)
$78 (formerly $90) million senior secured term loan due
December 2013, to Ba2 (LGD2, 29%) from Ba3 (LGD2,
Moody's affirmed the below ratings:
Corporate Family Rating, B1
Probability of Default Rating, B1
For further information, refer to the Credit Opinion to be published
The principal methodologies used in this rating were Global Business &
Consumer Service Industry published in October 2010, and Loss Given
Default for Speculative-Grade Non-Financial Companies in
the U.S., Canada and EMEA published in June 2009.
TravelCLICK Holdings, Inc. is a leading provider of marketing
and reservation services to independent and chain hotels worldwide.
Headquartered in Schaumburg, Illinois, TravelCLICK reported
revenue of $185 million in the twelve months ended September 30,
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
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Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
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Please see the ratings disclosure page on our website www.moodys.com
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of each rating category and the definition of default and recovery.
Asst Vice President - Analyst
Corporate Finance Group
Moody's Investors Service
Kendra M. Smith
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's raises TravelCLICK's bank facility rating to Ba2
250 Greenwich Street
New York, NY 10007
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