Travelex to clear £480m debt burden
Travelex will go into 2012 free of the high-interest debt that has badly hit the private-equity-owned bureau-de-change group since the credit crunch began.
The £606m sale of its specialist Global Business Payments arm to Western Union, announced in the summer, will finally go through by the end of the year. An industry source said that the money would be used to clear Travelex's senior debt, which stood at £641m at the end of 2010 and is believed to be around £480m today.
This still leaves more junior payment-in-kind loans, which totalled £272m in the 2010 accounts. These, though, are not due to mature – or have any interest be paid – until 2015.
"The Global Business sale allows Travelex to massively de-leverage," said the source. "The money will be used to pay off the senior debt and execute [expansion] plans going forward."
The senior debt, plus a relatively small overdraft, had cost Travelex more than £40m in interest a year. Such interest payments are typical when private equity firms – in this case Apax Partners – borrow heavily to fund their investments.
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