Travelex ratings cut again as S&P says Finablr unable to support firm
S&P again lowered its ratings for beleaguered money exchange firm Travelex, citing the inability of parent company Finablr to offer any financial and liquidity support.
The ratings agency said Travelex's capital structure was “unsustainable on a stand-alone basis” and considered its capacity to maintain viable operations as largely dependent on Finablr's ability to provide financial support.
However, Finablr has announced it is facing liquidity problems at both group and operational business level, and in some cases is unable to provide certain payment processing services.
Finablr board also discovered unaccounted checks of about $100 million that may have been used as security for financing arrangements for the benefit of third parties.
S&P said it was lowering its issuer credit rating to 'CC' from 'CCC' and lowering the rating on the group's €360m notes due in 2022 to 'C' from 'CCC-' and on the £90m super senior revolving credit facility (RCF) to 'CCC' from 'B-'.
“At the same time, we are removing all ratings on Travelex and its debt from CreditWatch negative, where we had placed them on March 4,” S&P said.
Travelex's weak liquidity position, due to a highly-leveraged capital structure and recent malware attack on its systems, meant debt restructuring, a distressed exchange, a change in debt priority, or default was “almost certain”, S&P said.
“Furthermore, uncertainty about the length and extent of the Covid-19 pandemic, restriction on international travel, and a significant fixed cost base could exhaust Travelex's available liquidity, and cause it to breach its financial covenants under its RCF in the near term,” it added and warned lenders would receive less principal or interest than promised.
“Should Travelex launch a debt restructuring plan to address its unsustainable capital structure, we would lower the issuer credit rating to 'D' (default) or 'SD' (selective default), after which time we would re-evaluate the new capital structure.”