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Case Study: Travel and Tour Operator

Financial Restructuring, Business Plan Reveiw and Assessment, Workout Consulting

Company: Tour operator with 17 business units, specializing in the creation and sales of itineraries around the world, primarily to US travelers.

Situation / Tasks Performed: Formed as part of a roll-up of independent travel companies between 1999-2001, the Company with $350 million in revenue in 2000 had high hopes for 2001 until the devastating attacks of September 11th brought the travel industry to a halt. With $52 million in bank debt TRG was engaged to assess the achievability of the business plan. As part of this review, TRG determined that the company was likely to face a significant working capital shortfall, with revenues expected to be substantially less in 2002.

In addition to playing an active roll in the day-to-day management of cash, TRG worked with management and the equity sponsor to identify working capital improvements and expense reductions necessary to reduce the seasonal cash requirement. After an unsuccessful attempt by the investment bankers to find a buyer for the business, TRG assisted in an overall re-capitalization of the company.

Results: The Company signed a 24-month forbearance agreement with the bank group, sub-debt, and seller notes. They also raised $10 million in long-term working capital and $10 million of seasonal financing. Breakeven is low as the company awaits the eventual recovery of the travel industry.

Nature of Assignment:
Primary: Financial Restructuring
Secondary: Business Plan Review and Assessment
Tertiary: Workout Consulting

Industry: Hospitality; Travel

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