Expedia Plans $500 Million of Bonds to Help Acquire Wotif

Expedia Inc., the online travel-booking service, is planning a debt sale to help fund its proposed acquisition of Wotif.com, an Australian website.

The company plans to issue $500 million of 10-year notes that may yield 215 basis points more than similar-maturity Treasuries, according to a person with knowledge of the deal, who asked not to be identified, citing lack of authorization to speak publicly. 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, according to data compiled by Bloomberg. 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 notes a Ba1 rating, one level below investment grade, according to a report today from analysts led by Stephen Sohn. The Wotif.com 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.

“Moody’s believes Expedia will continue to build its global geographic reach, technology capabilities, and travel and product offerings to keep pace with formidable competitors (e.g., the Priceline Group and Google) and preserve its leading global market position,” according to the report.

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

Shares climbed to $85.09 at 2:56 p.m. in New York, surpassing the record closing high of $85.04 on Aug. 4.

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