Funded through proceeds of new debt issuance
and deliverance of Tripadvisor stock
Certares permanently waives put right on
remaining Preferred Shares
Liberty TripAdvisor Holdings, Inc. (“Liberty TripAdvisor”)
(Nasdaq: LTRPA, LTRPB) announced today that it has entered into an
agreement (the “Repurchase Agreement”) with an affiliate of
Certares Management LLC (“Certares”) whereby Liberty TripAdvisor
expects to repurchase in a private transaction approximately 40% of
the 8% Series A Cumulative Redeemable Preferred Stock of Liberty
TripAdvisor (“Preferred Shares”) held by Certares.
The Preferred Shares will be repurchased in exchange for a
combination of:
- $92 million value of Tripadvisor, Inc. (“Tripadvisor”) common
stock, and
- Net proceeds from a proposed new issuance by Liberty
TripAdvisor of Exchangeable Senior Debentures with Tripadvisor
common stock underlying (the “Exchangeable Debentures”), less
- Approximately $35 million to fund Liberty TripAdvisor’s
anticipated working capital needs for several years
- An amount sufficient to fund interest payments anticipated
under the proposed Exchangeable Debentures through March 27, 2025,
the mandatory redemption date for the Preferred Shares and
- Certain transaction expenses.
In the Repurchase Agreement, Certares has (1) agreed to
permanently waive the right to cause Liberty TripAdvisor to redeem
Preferred Shares (the “Put Right”) prior to the mandatory
redemption date, (2) granted Liberty TripAdvisor the option to
repurchase all or a portion of the remaining Preferred Shares on or
after March 27, 2024 (the “Call Right”), and (3) agreed to hold the
Tripadvisor shares for a period of at least six months. Liberty
TripAdvisor has agreed to provide Certares with the right to
transfer up to 49% of the remaining Preferred Shares outstanding
following the completion of the repurchase pursuant to the
Repurchase Agreement, subject to its consent. Any future transferee
of Preferred Shares will be required to agree to the waiver of the
Put Right and the grant of the Call Right.
“Skilled execution by Tripadvisor, despite a challenging 2020,
has positioned the company well for an industry rebound and has
been appreciated by the market. Certares, with their deep
experience in travel, tourism and hospitality, has been a valuable
partner to Tripadvisor since they made their investment in Liberty
TripAdvisor a year ago,” said Greg Maffei, Liberty TripAdvisor
Chairman and CEO. “We are pleased to have reached this mutually
beneficial agreement, providing Certares with an attractive return
on their investment while maintaining their strategic partnership
and company involvement. At Liberty TripAdvisor, this stabilizes
our capital structure and voting position with the permanent waiver
of the put right, and enhances our ownership position with
increased upside in our remaining equity stake.”
“It’s been a productive year working with Tripadvisor and
Liberty TripAdvisor,” said Greg O’Hara, Founder and Senior Managing
Director of Certares. “We’re impressed with how the company handled
the pandemic while remaining focused on future opportunities. We’re
pleased that, through this agreement, we’ve achieved a monetization
while fortifying our relationship, becoming a direct investor in
Tripadvisor and continuing to hold a position in Liberty
TripAdvisor.”
The number of Preferred Shares actually repurchased from
Certares will depend upon the closing share price of Tripadvisor
common stock on the date of pricing of the proposed private
offering of Exchangeable Debentures and the amount of net proceeds
from the issuance of the Exchangeable Debentures (including from
the potential exercise of the option expected to be granted to the
initial purchasers to purchase additional Exchangeable Debentures).
Based on the closing share price of Tripadvisor common stock on
March 19, 2021 and assuming the initial purchasers elect to
exercise in full their option to purchase additional Exchangeable
Debentures, Liberty TripAdvisor estimates that it will repurchase
approximately 40% of the outstanding Preferred Shares. Liberty
TripAdvisor does not expect to incur a tax liability in connection
with the delivery of Tripadvisor shares to Certares.
Certares has also permanently waived its right to appoint a
preferred stock director to the Liberty TripAdvisor Board. Although
Greg O’Hara will resign as a preferred stock director, the Liberty
TripAdvisor Board has determined to immediately re-elect Mr. O’Hara
as a Class III member elected generally with all other directors.
Mr. O’Hara will also continue as Vice Chairman of the Liberty
TripAdvisor Board and as a member of the Tripadvisor Board
following the transaction.
Liberty TripAdvisor and Certares have also agreed that an
additional diverse director will be added to the Liberty
TripAdvisor Board following the transaction.
Prior to the aforementioned transactions, Liberty TripAdvisor
owns approximately 18.2 million shares of Tripadvisor common stock,
including 2.4 million shares pledged as collateral under its
variable prepaid forward, and approximately 12.8 million shares of
Tripadvisor Class B common stock. There is no impact to the
variable prepaid forward at Liberty TripAdvisor as a result of the
transactions.
Concurrent with the closing of the Exchangeable Debentures,
Liberty TripAdvisor plans to terminate its $25 million Senior
Secured Revolving Credit Facility (the “Credit Facility”).
All transactions referenced herein are subject to certain
conditions and expected to be completed on or about March 29, 2021
(with a portion of the Preferred Shares to be repurchased following
the closing of the initial purchasers’ option to purchase
additional Exchangeable Debentures, if exercised).
Liberty TripAdvisor is announcing the launch of the proposed
offering of the Exchangeable Debentures today by separate press
release with an initial aggregate principal amount of $300 million
(or up to $330 million aggregate principal amount if the initial
purchasers for the offering exercise in full the option expected to
be granted to them to purchase additional Exchangeable
Debentures).
The offering of the Exchangeable Debentures will not be
registered under the Securities Act of 1933, as amended (the
“Securities Act”), or any state securities laws and, unless so
registered, may not be offered or sold in the U.S. except pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable
state securities laws. The Exchangeable Debentures will be offered
by means of an offering memorandum solely to “Qualified
Institutional Buyers” pursuant to, and as that term is defined in,
Rule 144A of the Securities Act.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy the Exchangeable Debentures nor
shall there be any sale of the Exchangeable Debentures in any state
in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such
state.
Forward-Looking Statements
This press release includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements relating to the repurchase of
Preferred Shares, the issuance of Exchangeable Debentures, the
timing of the closing of the transaction with Certares and the
termination of the Credit Facility and the composition of the
Liberty TripAdvisor Board. These forward-looking statements involve
many risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by such
statements, including, without limitation, general market
conditions and conditions to the repurchase of Preferred Shares and
the issuance of Exchangeable Debentures. These forward-looking
statements speak only as of the date of this press release, and
Liberty TripAdvisor expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
Liberty TripAdvisor’s expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based. Please refer to the publicly filed documents of
Liberty TripAdvisor, including its most recent Annual Report on
Form 10-K, for risks and uncertainties related to Liberty
TripAdvisor’s business which may affect the statements made in this
press release.
About Liberty TripAdvisor
Liberty TripAdvisor Holdings, Inc. (Nasdaq: LTRPA, LTRPB)
consists of its subsidiary Tripadvisor. Tripadvisor is the world’s
largest online travel community, aggregating reviews and opinions
from its community of travelers about destinations, accommodations,
restaurants and activities throughout the world.
About Certares
Established in 2012, Certares focuses on direct investments in
proprietary transactions, leveraging deep sector experience in the
travel and hospitality industries, and with a consistent emphasis
on partnership with management teams to drive growth. Certares
brings together a team with decades of both operational and
investment experience in private equity, travel, tourism,
hospitality and travel-related business and consumer services. For
more information, please visit certares.com.
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