PwC and legal advisers help Travelex restructure its debt
Professional services firm PwC has clinched a restructuring deal for Travelex, which appointed administrators earlier in August. The news safeguards around 1,800 jobs in the UK.
Businesses centring on travel and hospitality have endured a nightmare start to 2020. With the global outbreak of coronavirus, and the international lock-down ushered in to slow its spread, every aspect of the leisure sector has been battered by Covid-19-related headwinds. While it almost goes without saying that airlines and hotels have been battered by the current conditions, however, financial services entities have also been surprise casualties of the crisis.
Travelex is a foreign exchange company founded by Lloyd Dorfman and headquartered in London. Its main businesses are international payments, foreign currency exchange, issuing prepaid credit cards for use by travellers and global remittance. Unfortunately, the firm entered the coronavirus lockdown already in a state of crisis – and the advent of a global pandemic pushed it toward collapse.
At the end of 2019, Travelex suffered more than a month of disruption to its operations, after it discovered on New Year's Eve that it had been hacked. While the firm did not disclose full details, a gang of cybercriminals called Sodinokibi claimed to have accessed reams of sensitive customer data and demanded a ransom of £4.6 million for their return. At the height of the disruption, cashiers resorted to using pen and paper to keep money moving at bureaux de change in airports and on High Streets.
By summer this year, Travelex was forced to appoint administrators from Big Four firm PwC to try and rescue its operations. PwC director in London, Toby Banfield, as well as chief operating officer for the United Kingdom business restructuring team David Kelly, and refinancing, restructuring and insolvency partner Edward Macnamara, were appointed as joint administrators of Travelex at the start of August.
The PwC team said a cyber-attack followed by the Covid-19 crisis had "acutely" hit the firm, before setting to work looking for a rescue deal. PwC quickly struck a "pre-pack" administration deal – where a firm sells all or some of its assets to a pre-determined buyer – saving the majority of UK Travelex jobs in the process. The deal also secured Travelex’s financial obligations by more than half, from over £385 million, to £160 million.
PwC’s Banfield noted in a statement that the deal “safeguarded 1,802 jobs in the UK and a further 3,635 globally, and ensured the continuation of a globally recognised brand.”
Travelex was ultimately purchased by a newly created company controlled by its lenders, including the parts that deal with supermarkets and large corporate and banking customers, and some of its airport business. However, while the deal delivered a reported £84 million of new money, it has not prevented the High Street shops and airport branches which were closed during lockdown from being permanently lost. This will see the loss of more than 1,300 jobs in the UK.
Sidley Austin acted as legal adviser to Travelex on the completion of its financial and operational restructuring move, with PwC acting as financial adviser. The committee of lenders in the debt restructuring received legal advice from Latham & Watkins, employing a team led by London restructuring and special situations partners Helena Potts and Yen Sum, with assistance from two associates, Matt Hope and Stephen Kennedy.
