Travelport's parent, Toro Private Holdings I, and its finance subsidiary, Travelport Finance (Luxembourg) SARL, were downgraded today, Sept. 23, by S&P Global Ratings to CC and Credit Watch Negative, from CCC and a negative outlook, after the company announced a debt exchange and restructuring.

Travelport's issue-level ratings were also reduced. Its $2.8 billion of first-lien term loans due May 2026 and a $150 million revolving credit facility due May 2024, were lowered to CC from CCC. Its $500 million second-lien term loan due May 2027, was cut to C from CC.

On Sept. 17, Travelport announced it had reached an agreement with the steering committee of an ad hoc group of lenders to implement "financing open market purchase and exchange transactions" by which the company's existing lenders will provide $500 million in new funding, while the parties will release each other from all related litigation and claims, among other things.

The "financing open market purchase and exchange transactions" are open to all existing Travelport lenders on a pro rata basis and are being backstopped by certain members of the ad hoc group, as well as by affiliates of Travelport's existing equity owners, Siris Capital LLC, and Evergreen Coast Capital Corp, the private equity affiliate of Elliot Management Corp.

Ratings believes that the debt exchange is tantamount to a default, given that lenders will receive less than originally promised. The transactions are expected to close by Sept. 24.

U.K.-based Travelport operates a commerce platform providing distribution, technology, travel payment and other solutions for the global travel and tourism industry. Siris and Evergreen acquired Travelport in a $4.4 billion transaction that closed in May 2019.