- Commitment secured from Crestview Partners through private
placement of perpetual convertible preferred stock
- Credit facility amended to provide financial covenant relief
until September 30, 2022
Viad Corp (NYSE: VVI) today reported that it has closed on an
agreement with funds managed by private equity firm Crestview
Partners for the private placement of up to $180 million of
preferred stock, and an agreement with its lender group to enhance
the Company’s financial flexibility for the next eight fiscal
quarters.
“Since the global COVID-19 pandemic began, we have taken
proactive measures to ensure that Viad is sufficiently capitalized
to withstand this downturn and emerge in a position of strength,
with Pursuit poised to continue on its pre-COVID growth
trajectory,” commented Steve Moster, president and chief executive
officer. “I am happy to report that we have secured additional
capital of up to $180 million from Crestview and longer-term
financial covenant relief on our existing credit facility until the
end of the third quarter of 2022.”
Moster continued, “We believe that the investment from Crestview
and amended credit facility provide us with ample financial
flexibility and strength to not only endure what may be a slow
recovery within the event industry and a gradual return to normal
levels of leisure travel, but also to capitalize on growth
opportunities in the global travel and hospitality market through
Pursuit’s Refresh, Build, Buy strategy.”
Crestview Partners has made an initial investment of $135
million in newly-issued perpetual convertible preferred stock that
carries a 5.5% dividend, which is payable in cash or in-kind at the
Company’s option. The preferred stock is convertible into shares of
Viad common stock at a conversion price of $21.25 per share,
representing a premium of 42% to Viad’s ten-trading day
volume-weighted average price. The agreement also includes a
delayed draw commitment of up to $45 million that Viad may access
during the next 12 months at the same terms as the initial
investment.
On an as-converted basis, Crestview owns approximately 23.7% of
the pro forma common shares outstanding with its initial investment
of $135 million. In connection with Crestview’s investment,
Crestview Partner and Head of Media, Brian Cassidy and Crestview
Operating Executive, Kevin Rabbitt have joined Viad’s Board of
Directors, increasing the size of the board from seven to nine
members.
Moster said, “Crestview is a valuable strategic partner for us,
possessing strong industry knowledge and operating experience on
both sides of our business. I look forward to working with Brian
and Kevin and the rest of the Board as we re-configure GES to be a
leaner and more profitable business and continue to pursue new
growth opportunities at Pursuit. We remain committed to closely
managing cash flows and our businesses to maximize value for all
shareholders.”
Brian Cassidy from Crestview commented, “We are impressed by the
leadership positions and competitive advantages of Viad’s
businesses and the management teams running them led by Steve
Moster and David Barry, particularly during this very difficult
period. Pursuit is on an exciting and accretive growth trajectory
and has a clear path to global leadership in a growing market with
high barriers to entry. GES is well positioned to take advantage of
its leading position as in-person events return, to emerge as a
more focused, and stronger platform for sustained growth and high
free cash flow generation. Crestview’s investment in Viad
underscores our confidence in the long-term value inherent in
businesses that leverage the enduring allure of unique travel
experiences and the power of face-to-face events, and we look
forward to being partners with management and the company for years
to come.”
The proceeds from Crestview’s initial investment will be used to
repay a portion of Viad’s revolver borrowings, provide additional
short-term liquidity, fund capital expenditures, and support
general corporate purposes. On a pro forma basis, Viad’s liquidity
position at June 30, 2020 would have been approximately $340
million when factoring in the total $180 million investment
commitment from Crestview and $17 million of proceeds received in
July from the sale of a GES warehouse less fees and expenses
related to the equity raise and credit facility amendment.
The terms of Viad’s amended revolving credit facility provide
for the waiver of existing leverage ratio and interest coverage
tests until the third quarter of 2022. During the covenant waiver
period, the Company is required to maintain minimum liquidity of
$125 million with a step down to $100 million at December 31, 2020,
the interest rate on borrowings under the revolver is equal to
LIBOR plus 350 basis points, and Viad will be precluded from paying
cash dividends. Additionally, a LIBOR floor of one percent will
apply for the duration of the credit agreement. The amended credit
agreement also allows Viad to make acquisitions under certain
conditions.
The Company has filed a Form 8-K with the Securities and
Exchange Commission containing additional information regarding the
terms of the convertible preferred stock and related agreements, as
well as the credit facility amendment. Although not required for
the initial investment of $135 million made by Crestview, the
Company will seek shareholder approval for the additional $45
million delayed draw commitment and certain other technical terms
of the convertible preferred stock under applicable New York Stock
Exchange rules. The Company’s ability to access the additional $45
million delayed draw commitment is subject to, among other
customary conditions, the receipt of Viad shareholder approval if
necessary under applicable New York Stock Exchange rules.
Viad was represented in the transaction by Moelis & Company
LLC as placement agent and Latham & Watkins LLP as legal
advisor. Crestview was represented by Jefferies Group LLC and Paul,
Weiss, Rifkind, Wharton & Garrison LLP served as legal
advisor.
Conference Call Details
Viad will host a conference call on Thursday, August 6, 2020, at
9:00 a.m. (Eastern Time) to review actions taken to bolster
liquidity and financial flexibility, discuss second quarter 2020
results, and provide updates regarding the business. To join the
live teleconference, please call (833) 513-0557 and enter the
passcode 5064298 or access the webcast through our website. A
replay will be available for a limited time at (800) 585-8367 or
(416) 621-4642 and enter the passcode 5064298 or visit our website
and link to a replay of the webcast.
About Viad
Viad (NYSE: VVI) generates revenue and shareholder value through
two businesses: Pursuit and GES. Pursuit is a collection of
inspiring and unforgettable travel experiences in Alaska, Montana,
the Canadian Rockies, Vancouver, and Reykjavik, as well as new
experiences in development in Las Vegas and Toronto. Pursuit’s
collection includes attractions, lodges and hotels, and sightseeing
tours that connect guests with iconic places. GES is a global,
full-service live events company offering a comprehensive range of
services to the world's leading brands and event organizers. Our
business strategy focuses on providing superior experiential
services to our customers and sustainable returns on invested
capital to our shareholders. Viad is an S&P SmallCap 600
company. For more information, visit www.viad.com.
About Crestview Partners
Founded in 2004, Crestview
Partners is a New York-based private equity firm focused on the
middle market. Crestview manages funds with over $9 billion of
aggregate capital commitments. The firm is led by a group of
partners who have complementary experience and distinguished
backgrounds in private equity, finance, operations and management.
Crestview has senior investment professionals focused on sourcing
and managing investments in each of the specialty areas of the
firm: media, industrials and financial services. For more
information: www.crestview.com.
Forward-Looking Statements
This press release contains a number of forward-looking
statements. Words, and variations of words, such as “will,” “may,”
“expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,”
“estimate,” “anticipate,” “deliver,” “seek,” “aim,” “potential,”
“target,” “outlook,” and similar expressions are intended to
identify our forward-looking statements. Similarly, statements that
describe our business strategy, outlook, objectives, plans,
intentions or goals also are forward-looking statements. These
forward-looking statements are not historical facts and are subject
to a host of risks and uncertainties, many of which are beyond our
control, which could cause actual results to differ materially from
those in the forward-looking statements.
Important factors that could cause actual results to differ
materially from those described in our forward-looking statements
include, but are not limited to, the following:
- the impact of the COVID-19 pandemic on our financial condition,
liquidity, and cash flow;
- the extent to which the COVID-19 pandemic will affect our
ongoing business and the duration of those effects;
- our ability to obtain shareholder approval of, and satisfy
other conditions to, the delayed draw commitment, if
applicable;
- our ability to successfully integrate and achieve established
financial and strategic goals from acquisitions;
- general economic uncertainty in key global markets and a
worsening of global economic conditions;
- our dependence on large exhibition event clients;
- the importance of key members of our account teams to our
business relationships;
- the competitive nature of the industries in which we
operate;
- travel industry disruptions;
- unanticipated delays and cost overruns of our capital projects,
and our ability to achieve established financial and strategic
goals for such projects;
- seasonality of our businesses;
- transportation disruptions and increases in transportation
costs;
- natural disasters, weather conditions, and other catastrophic
events;
- our multi-employer pension plan funding obligations;
- our exposure to labor cost increases and work stoppages related
to unionized employees;
- liabilities relating to prior and discontinued operations;
- adverse effects of show rotation on our periodic results and
operating margins;
- our exposure to currency exchange rate fluctuations;
- our exposure to cybersecurity attacks and threats;
- compliance with laws governing the storage, collection,
handling, and transfer of personal data and our exposure to legal
claims and fines for data breaches or improper handling of such
data;
- the effects of the United Kingdom’s exit from the European
Union; and
- changes affecting the London Inter-bank Offered Rate.
For a more complete discussion
of the risks and uncertainties that may affect our business or
financial results, please see Item 1A, “Risk Factors,” of our most
recent annual report on Form 10-K filed with the SEC and Item 1A,
“Risk Factors,” of the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2020. We disclaim and do not
undertake any obligation to update or revise any forward-looking
statement in this press release except as required by applicable
law or regulation.
Additional Information and Where to Find It:
This communication relates to,
among other things, the proposed transaction issuance of preferred
stock by the Company pursuant to the definitive documents, which
provides that the Company shall use reasonable best efforts to call
and hold a special meeting of the stockholders of the Company, as
promptly as reasonably practicable following the date hereof, to
seek stockholder approval. In connection with the proposed
transaction special meeting of stockholders to seek stockholder
approval, the Company will file relevant materials with the
Securities Exchange Commission, including the Company’s proxy
statement on Schedule 14A (the “Proxy Statement”). This
communication is not a substitute for the Proxy Statement or any
other document that the Company may file with the Securities
Exchange Commission or send to its stockholders in connection with
the proposed transaction. BEFORE MAKING ANY VOTING DECISION,
STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SECURITIES EXCHANGE COMMISSION, INCLUDING
THE PROXY STATEMENT, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain the documents
(when available) free of charge at the Securities Exchange
Commission’s website, http://www.sec.gov, and the Company’s
website, www.Viad.com. In addition, the documents (when available)
may be obtained free of charge by directing a request to
ir@viad.com.
Participants in the Solicitation:
The Company and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
Company’s stockholders in respect of the special meeting of
stockholders. Information about the directors and executive
officers of the Company is set forth in the proxy statement for the
Company’s 2020 annual meeting of stockholders, which was filed with
the Securities Exchange Commission on April 3, 2020, and in other
documents filed by the Company, including on behalf of such
individuals, with the Securities Exchange Commission. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the Proxy
Statement and other relevant materials to be filed with the
Securities Exchange Commission in respect of the proposed
transaction when they become available.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805006006/en/
Carrie Long Investor Relations (602) 207-2681 ir@viad.com
Viad (NYSE:VVI)
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