Travelex Owner Cashes In With £320m Debt Deal
The owner of Travelex, the world's largest foreign exchange retailer, is pursuing a £320m refinancing deal as it seeks to take advantage of red-hot debt markets.
I understand that Apax Partners, the private equity firm, has appointed Bank of America Merrill Lynch (BAML), to work on a ratings exercise ahead of the deal, which will involve putting in place new long-term debt facilities for Travelex.
The debt being replaced will be a payment-in-kind (PIK) note, which proved controversial during the buyout boom because of the way in which it accumulates interest with sometimes-crippling consequences for the debtor. Other companies which took on PIK debt included Manchester United Football Club and New Look, the high street fashion chain also part-owned by Apax.
Travelex has continued to perform strongly though the recession and beyond, with strong exposure to Brazil, China and other fast-growing economies.
A newspaper report at the weekend said that Apax had been approached about a takeover of Travelex by an unnamed Asian bidder, although Sky News understands that the prospective buyer, which is based in China, has not presented a realistic valuation of the business and that no talks have taken place for some time .
Travelex's refinancing, which is unlikely to take place until next year, is understood to have been discussed at a board meeting earlier this week.
The appointment of BAML to conduct a private ratings exercise was necessary ahead of the possible issuance of a high-yield bond or other debt to replace the PIK, one insider said.
Travelex, which declined to comment, has been substantially reshaped in recent years after selling its business payments and card programme management divisions for a combined £900m.
The company was set up by Lloyd Dorfman, who still serves as its chairman, in 1976, and has since become one of Britain's most successful private companies.