Floating on a sea of debt

11 May 2007 By Robert Cyran Follow @rob_cyran

The private equity group s purchase of $4.3bn worth of travel businesses from Cendant last year had all the elements of a high wire act. Loose credit markets have allowed it to extract its initial investment. Floating its internet subsidiary will reduce its heavy debt burden.

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Orbitz filed to go public, selling as much as $750m in an initial public offering. The internet travel group has a history of operating losses – its 2007 pro forma loss is $118m. Orbitz is a subsidiary of Travelport. The proceeds will be used to reduce Travelport's debt.

Blackstone paid $4.3bn for Travelport in June 2006. The private equity group reportedly contributed $1bn of equity in the deal. In 2006, Travelport generated $351m of ebitda and spent $359m on interest and capital expenditure.

In March 2007, Travelport issued $1.1bn in paymentinkind debt in order to pay a special dividend to Blackstone.

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