Expedia raises $3.2bn of fresh capital in fight to survive

Expedia, the online travel booking company, has raised $3.2bn in fresh capital, including $1.2bn from the private equity firms Apollo Global Management and Silver Lake, to bolster its balance sheet amid a shutdown in global travel due to the coronavirus outbreak.

The group also announced the appointment of a new chief executive and chief financial officer. The previous management were forced out following disagreements over Expedia’s strategy in December. Neither of the new appointees nor any other member of the board will take a salary this year, the company said.

“We have one mandate — to conserve cash, survive, and use this time to reconstruct a stronger enterprise,” said Barry Diller, Expedia’s chairman.

Travel companies have rushed to shore up their finances following a sharp drop in revenues due to coronavirus, which has suspended air travel and holiday bookings. The struggling cruise operator Carnival raised $6.3bn in debt and equity from investors this month following high-profile breakouts of the virus on its ships.

Silicon Valley-based Silver Lake has recently been active in several prominent deals, including a combined $2bn debt and equity financing in the travel accommodation group Airbnb and a convertible note investment in social media company Twitter.

Private equity groups are sitting on record amounts of cash, with some raising additional funds to capitalise on companies effected by coronavirus. 

Simultaneously, several US-listed companies are seeking financing avenues, given the hit to their revenues, and are increasingly willing to sell discounted stocks to private equity groups.

Listed companies have raised about $17bn this year up until April 8 from so-called private investments in public equity, almost double the amount compared with the same period last year, according to PrivateRaise data.

Shares in Expedia have fallen by more than half since late February as investors brace for hits to its portfolio of businesses, including Hotels.com, Travelocity and Vrbo. The company withdrew 2020 guidance last month, saying the coronavirus outbreak had created uncertainty in the travel business and would have a larger than expected financial impact.

On Thursday Expedia said that it would be implementing furloughs and reduced working hours for staff that had “limited work”. Earlier in February it announced plans to cut 3,000 jobs.

The new chief executive, Peter Kern, has been a member of the Expedia board since 2005 and has helped Mr Diller run the business following the internal battles between Mr Diller and former chief executive Mark Okerstrom. 

Mr Diller said that Expedia had been unprepared for the volume of cancellations and that he had been having daily “intensive sessions” with the senior management team since March 16. Calls to Expedia’s call centre spiked 500 per cent in the early stages of the crisis.

JPMorgan and Moelis advised Expedia on the transaction, which was first reported by The Wall Street Journal.

Apollo and Silver Lake declined to comment.

Additional reporting by Eric Platt in New York

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