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CWT poised to file for bankruptcy protection to restructure

One of the world’s leading corporate travel companies is poised to file for bankruptcy protection in the US in a mark of the depth of the crisis in the sector.

CWT confirmed it would enter a ‘pre-packaged’ Chapter 11 bankruptcy protection process to push through financial restructuring. However, the travel management company expects the process to be quick after reaching agreement with stakeholders “representing 100% of our bank group” and creditors holding “over 90% of secured debt”.

The deal will see the company shed almost $900 million of its $1.5 billion debt and the Carlson family which has controlled CWT since its creation in the 1990s cede majority ownership to its creditors.

The deal provides for “all business partners and providers of goods and services to CWT to be paid in full”, with the company’s financial stakeholders pledging “substantial long-term liquidity”.

In a statement, CWT said: “We plan to use a ‘pre-packaged’ court-supervised process to implement the agreement while we continue operating normally.” It is understood the formal filing will take place on or around November 7 in Texas.

CWT said the deal “will significantly strengthen our financial position, provide substantial liquidity and reduce our debt by approximately 50%”.

The agreement with creditors came after the company defaulted on the interest due on a $250 million bond in June.

Chief executive Michelle McKinney Frymire, who took over from Kurt Ekert on May 1, hailed the agreement as “a vote of confidence from an enormous portion of our investor base”.

She said: “We’re pleased to be moving ahead with overwhelming support from our financial partners, underscoring their confidence in the market, CWT and our strategy and services.”

But credit ratings agency Fitch labelled the deal a “distressed debt exchange”.

Frymire said: “Implementation will enable us to move beyond the pandemic, accelerate investments and position CWT to benefit from the recovery under way.”

The company has 15,000 employees. It forecasts a return to positive cashflow in 2024.

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