Wyndham Worldwide Corporation (WYN) recently announced the closure of a new $1 billion revolving credit facility. The new credit will facilitate in paying down the company’s high-cost debt and extend its maturity period. The new facility will replace the existing $980 million facility and mature in July 2016. The previous facility would have matured in October 2013.
JPMorgan Chase & Co. (JPM) and Bank of America Corporation (BAC) acted as Joint Bookrunners for the new revolving credit facility. This note issuance is a follow-up on management's target to attain an optimal capital structure.
Wyndham ended its first quarter of 2011 with cash and cash equivalents of $175.0 million, compared with $155 million at the end of 2010. Vacation ownership contract receivables, net, at the end of first quarter 2011 were $2.9 billion versus $3.0 billion at the end of fiscal 2010.
The company’s other long-term borrowing consists of 6.00% senior unsecured notes (due December 2016), 9.875% senior unsecured notes (due May 2014), 3.50% convertible notes (due May 2012), 7.375% senior unsecured notes (due March 2020), 5.75% senior unsecured notes (due February 2018) and 5.625% senior unsecured notes (due March 2021).
Vacation ownership and other inventory was approximately $1.2 billion, flat year over year. Securitized vacation ownership debt at the end of first quarter 2011 was $1.7 billion, flat year over year. Other debt was $2.0 billion compared with $2.1 billion as of December 31, 2010.
Wyndham continues to target $600.0 million to $700.0 million of free cash flow generation for 2011, the vast majority of which will likely come from its vacation ownership business. The company will then use this cash flow to expand its operations by investing in its rental and exchange business. Management believes that foreign tax credits will likely benefit cash flow for the next several years.
Wyndham currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Outperform recommendation on the stock.
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