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Travel + Leisure Co. Secures $500 Million in Debt Financing

Travel + Leisure Co. Announces Pricing of $500 Million Senior Secured Notes Offering

In a significant move within the travel and hospitality sector, Travel + Leisure Co. (NYSE: TNL), a leading player in the vacation ownership and exchange industry, has successfully priced a private offering of $500 million in senior secured notes. The notes, set to mature in 2033, carry an interest rate of 6.000% per annum and represent a strategic financial maneuver aimed at optimizing the company's debt structure amid evolving market conditions.

The offering, announced through a regulatory filing and market update, involves the issuance of these notes by Travel + Leisure Co. directly. They are being offered in a private placement exempt from the registration requirements of the U.S. Securities Act of 1933, targeting qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S. This structure allows the company to access capital efficiently while complying with securities regulations, bypassing the more cumbersome public registration process.

Key details of the notes include their senior secured status, meaning they are backed by collateral, which provides investors with a layer of security in the event of default. The notes will be guaranteed on a senior secured basis by certain subsidiaries of Travel + Leisure Co., further enhancing their appeal to risk-averse investors. Interest on the notes will be payable semi-annually, providing a steady income stream for holders. The pricing reflects current market dynamics, with the 6.000% coupon rate positioned competitively against prevailing interest rates and comparable corporate debt offerings in the leisure and tourism space.

Proceeds from this offering are earmarked for debt repayment and general corporate purposes, underscoring Travel + Leisure Co.'s focus on financial prudence. Specifically, the net proceeds, after deducting initial purchasers' discounts and estimated offering expenses, will be used to repay outstanding borrowings under the company's revolving credit facility and a portion of its term loan B facility. This refinancing strategy is expected to reduce interest expenses over time and improve liquidity, allowing the company greater flexibility to invest in growth initiatives or navigate economic uncertainties.

The transaction is being facilitated by a syndicate of prominent initial purchasers, led by J.P. Morgan Securities LLC, BofA Securities, Inc., and Wells Fargo Securities, LLC. Other participants include Barclays Capital Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Scotia Capital (USA) Inc., Truist Securities, Inc., U.S. Bancorp Investments, Inc., BMO Capital Markets Corp., Fifth Third Securities, Inc., and PNC Capital Markets LLC. This broad involvement from major financial institutions highlights the market's confidence in Travel + Leisure Co.'s creditworthiness and the attractiveness of the offering.

Closing of the notes offering is anticipated to occur on or around October 24, 2024, subject to customary closing conditions. Upon completion, this will mark another milestone in the company's ongoing efforts to manage its capital structure effectively. Travel + Leisure Co., formerly known as Wyndham Destinations, rebranded in 2021 to leverage the iconic Travel + Leisure media brand, which it acquired in a deal with Meredith Corporation. The company operates a vast portfolio of vacation ownership resorts, exchange programs like RCI, and travel clubs, serving millions of members worldwide.

This financial step comes at a time when the travel industry is rebounding from the disruptions caused by the global pandemic, with increased demand for leisure travel and experiential vacations. However, challenges such as inflationary pressures, fluctuating fuel costs, and geopolitical tensions continue to influence the sector. By securing this funding at a fixed rate, Travel + Leisure Co. positions itself to mitigate interest rate volatility, which has been a concern in recent years amid central bank rate hikes.

From an investor perspective, these notes offer a blend of yield and security, appealing to those seeking exposure to the resilient travel recovery story. The 2033 maturity provides a long-term horizon, aligning with the company's strategic outlook for sustained growth in vacation ownership. Analysts have noted that this offering could enhance the company's debt maturity profile, reducing near-term refinancing risks and supporting dividend payments or share repurchases if market conditions allow.

Broader context reveals that Travel + Leisure Co. has been actively managing its balance sheet. Earlier this year, the company reported solid quarterly results, with revenue growth driven by higher vacation ownership interest sales and membership fees. Its timeshare model, which generates recurring revenue through annual fees and financing, provides a stable cash flow base, making it an attractive borrower in the debt markets.

The announcement also includes standard forward-looking statements, cautioning that actual results may differ due to various risks, including economic downturns, changes in consumer spending on travel, or regulatory shifts in the hospitality industry. Investors are advised to review the company's SEC filings for a comprehensive risk assessment.

In summary, this $500 million notes offering represents a calculated financial strategy for Travel + Leisure Co., aimed at strengthening its position in a competitive landscape. By refinancing existing debt at favorable terms, the company not only optimizes its cost of capital but also signals confidence in its long-term prospects. As the travel sector continues to evolve, such moves underscore the importance of agile capital management in sustaining growth and shareholder value. This development will be closely watched by market participants, potentially influencing sentiment toward other players in the leisure and tourism space. With the closing imminent, stakeholders can anticipate updates on the transaction's completion and its immediate impact on the company's financial metrics.

Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/news/4479252-travel-leisure-co-prices-500m-private-offering-of-senior-secured-notes-due-2033 ]