Expedia Sells $500 Million of Bonds to Help Buy Wotif

Expedia Inc. (EXPE), the online travel-booking service, issued $500 million of debt to help fund its proposed acquisition of Wotif.com, an Australian website.

The company sold 4.5 percent notes due 2024 that yield 215 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. Proceeds will be used for general corporate purposes, including the Wotif.com purchase, according to a regulatory filing.

Expedia last issued debt in 2010, when it sold $750 million of 5.95 percent, 10-year securities that yielded 300 basis points more than benchmarks, Bloomberg data show. Those bonds traded Aug. 11 at 113.13 cents on the dollar to yield 3.51 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Moody’s Investors Service assigned the new notes a Ba1 rating, one level below investment grade, according to a report today from analysts led by Stephen Sohn. The Wotif.com (WTF) acquisition is expected to raise Expedia’s leverage to the “mid to high 2 times range” from 1.7 times as of June 30, the report said.

“Event risk remains inherent” yet “Moody’s believes that improving profits and cash flow” will “lead to enhanced liquidity over the next several years,” according to the report.

Standard & Poor’s ranked the bonds one level higher at BBB-, the lowest investment-grade ranking, according to a report today.

Expedia announced its plans to buy Wotif.com for about $658 million last month.

Shares climbed 0.7 percent to $85.02 in New York today, short of the record closing high of $85.04 on Aug. 4.

To contact the reporter on this story: Adam Janofsky in New York at ajanofsky4@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net Caroline Salas Gage, Richard Bravo

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