Helloworld Travel announced that it has entered into a binding agreement to divest its corporate and entertainment travel businesses in Australia and New Zealand to Corporate Travel Management for $175 million.
The transactions will see HLO receive $100 million in cash and $75 million in CTM shares escrowed 12 months from the date of completion.
The corporate and entertainment travel businesses achieved normalised EBITDA of approximately $22 million in FY19 representing a transaction multiple of 8x.
Helloworld will use the cash to repay debt, provide additional liquidity, capital management and to support further growth opportunities in its retail and leisure travel businesses as activity rebounds following the COVID-19 disruption.
The transaction will increase total liquidity to $155 million bolstering the company’s net cash to $85 million. The Transaction represents strong value creation for HLO shareholders following a period of successful contract wins and extensions in the Corporate Business and HLO expects to recognise a profit on the sale.
Helloworld said it will continue to focus on its leisure and corporate travel networks, its air consolidation business, the wholesale and inbound businesses and its logistics business as Australia, New Zealand and the South Pacific continue to recover and reopen to the world following the impact of COVID-19. It is expected that the transaction will provide the company with the flexibility to capitalise on the travel rebound as pent-up consumer demand and high levels of household savings are met with opening borders.
This recovery is already underway, with Helloworld recording non-Corporate TTV in November of A$94.8 million, up 50.5% on October 2021 and 191.7% on November 2020.
The transaction is subject to various approvals and is expected to occur during the first quarter of the 2022 calendar year.
HLO Chief Executive Officer and Managing Director, Andrew Burnes said, “While our corporate and entertainment travel businesses are in the early stages of benefiting from the COVID-19 rebound, we believe this transaction is at a compelling valuation to maximise HLO shareholder value and that will allow HLO to focus on operations which pre COVID-19, represented 80% of our TTV. This will allow the business to capitalise on what we expect to be very significant opportunities during the recovery period ahead.”