Benzinga | Jul 20, 2020 09:20AM EDT

Wyndham Destinations Announces Financial Covenant Amendments For Credit Facilities

ORLANDO, Fla., July 20, 2020 /PRNewswire/ --Wyndham Destinations, Inc.(NYSE:WYND) (the "Company") announced today that it has entered into an amendment (the "Credit Amendment") to its $1.0 billion revolving credit facility (the "Revolving Credit Facility"). The Company also announced preliminary second quarter 2020 financial results and updated its full year Adjusted Free cash flow outlook.

"We are pleased to deliver on our financial and operational objectives in the second quarter and believe they reinforce the resiliency of our business model. As expected, we were Adjusted Free cash flow positive in the first half of the year and we finished the quarter with 85% of our resorts open," said Michael D. Brown, President and CEO of Wyndham Destinations. "With the continued and likely extended period of uncertainty with COVID-19, the amendment announced today provides us with additional near-term flexibility to mitigate any impact on the leisure travel industry. We are very thankful to our valuable lending partners for their ongoing support and partnership. Our liquidity position is strong and we are confident that we will emerge stronger once leisure travel returns to normal."

* The Credit Amendment establishes a covenant relief period and modifies the existing quarterly-tested financial covenants from the date of the Credit Amendment until the earlier of (i) April 1, 2022 and (ii) termination by the Company of the relief period, subject to certain conditions. Among other things, the Credit Amendment raises the first lien leverage-based financial covenant by varying levels for each applicable fiscal quarter during the relief period to provide the Company with significant financial flexibility.

* Maintains the ability to pay current dividends and continue to invest in its business throughout the covenant relief period. The Company expects to recommend a third quarter dividend of $0.30 per share for approval by the Company's Board of Directors in August.

* The Company expects to report second quarter 2020 net loss from continuing operations of $164 million and Adjusted EBITDA(1) of $16 million.

* The Company expects to report second quarter 2020 Net cash provided by operating activities from continuing operations of $73 million and Adjusted Free cash flow from continuing operations of $166 million.

* The Company is withdrawing its previous outlook for 2020 full year Adjusted Free cash flow from continuing operations of $100 million to $150 million and instead is targeting to be Adjusted Free cash flow positive for the full year.

(1) This press release includes Adjusted EBITDA and Adjusted Free cash flow from continuing operations, which are metrics that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. ("GAAP"). See "Presentation of Financial Information" and the financial schedules for the definitions and reconciliations of these non-GAAP measures in accordance with GAAP.

Key Terms of the Credit Amendment:

* The first lien leverage-based financial covenant for the Revolving Credit Facility will be increased by varying levels for each applicable fiscal quarter during the covenant relief period, in each case which represents an increase to the existing leverage-based financial covenant of 4.25:1.00 (see below).

* The minimum interest coverage ratio will be 2.0x through the end of the relief period.

* The Company has maintained the ability to pay the existing level of dividends per share.

* Adds a minimum liquidity covenant of $250 million during the covenant relief period.

* The minimum liquidity covenant will increase by $0.50 for every $1.00 of dividend distribution during the relief period.

* The Company has the option to terminate the relief period at its discretion (subject to certain conditions), at which time those restrictions established by the Credit Amendment would be lifted.

PJT Partners served as independent financial advisor to the Company on its credit facility amendment.

First Lien Leveraged-Based Financial Covenant during Covenant Relief Period

The minimum first lien leverage ratio for the Revolving Credit Facility during covenant relief period or until early termination thereof is as follows:

* Quarter ended September 30, 2020: <6.50x Quarter ended December 31, 2020: <7.50x Quarter ended March 31, 2021 through the quarter ended June 30, 2021: <7.50x (with annualization1) Quarter ended September 30, 2021: <6.75x (with annualization1) Quarter ended December 31, 2021: <6.00x Quarter ended March 31, 2022: <5.25x

1For the purposes of calculating the first lien leverage ratio in certain specified quarters during the relief period, the Company may, by providing the requisite notice to the administrative agent and complying with other requirements set forth in the amendment, elect to calculate the consolidated EBITDA on an annualized basis for the applicable test period (see 8k for further details).