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S&P Places Orbitz Ratings On CreditWatch Negative

The Associated Press

NEW YORK (AP) — Standard & Poor's Ratings Services on Friday placed its ratings on Orbitz Worldwide Inc. on CreditWatch with negative implications.

The Chicago-based travel Web site's "B'' corporate credit rating was among those put on watch.

The placement is based on the company's announcement Thursday that it is seeking and amendment to its $685 million credit agreement that would permit the company to make open market purchases of that debt.

"If the amendment is approved and the company buys back bank debt at a material discount, we believe this could qualify as a distressed debt purchase under our criteria," said Standard & Poor's credit analyst Betsy Snyder.

Ratings on Orbitz, which also operates CheapTickets.com and Britain's ebookers, reflect the majority stake in the company held by Travelport and affiliates of the Blackstone Group, one of the owners of Travelport Ltd. The ratings also reflect an aggressive financial profile and the seasonal and cyclical nature of the travel industry, S&P said. They also incorporate the company's position in the online travel business and its strong cash flow.

If Orbitz completes open market purchases of its term loan at a discounted price, S&P said it will evaluate whether they consider the move a distressed debt purchase. If it is, that could result in a downgrade to "SD," or selective default.

Orbitz shares closed Friday's session down 11 cents, or 5 percent, at $2.08. Shares have traded in a 52-week range of $1.10 to $8.15. The stock is down about 44 percent since the start of the year.