The bottom line in Amadeus' announcement yesterday that it will attempt a public offering on the Spanish Stock Exchanges in the first half of the year is this: UK private equity firms BC Partners and Cinven likely will retain control of Amadeus and they will use the proceeds to pay down debt.
The Amadeus attempt at a public offering, which it says is dependent on market conditions, follows Travelport's decision in February to withdraw its flotation try in London.
The Amadeus public offering is projected to be the largest in Western Europe so far in 2010, as financial analysts say the IPO market is heating up again with stock prices rebounding.
Amadeus intends to execute a primary offering of shares valued at Euro 910 million plus a secondary offering, all of which combined would amount to at least 25% of the company.
There is nothing in the public announcement about the private equity owners ceding control to Lufthansa, Iberia and Air-France-KLM, which hold a minority stake in Amadeus.
Highly leveraged when BC Partners and Cinven took Amadeus private several years ago, Amadeus would use the net proceeds of the IPO to reduce debt with the net debt to EBITDA ratio declining to 3.25x post-IPO, Amadeus says. The ratio was 5.4x when Amadeus refinanced in 2007.
What does this mean to Amadeus' airline and travel agency partners?
The development isn't earth-shattering in impact, although in theory Amadeus would find itself in a more flexible financial position, with the ability to make longer-term investments, including acquisitions, to shore up its airline solutions and global distribution system business lines.
Travelport, in particular, and investors in the U.S. and Europe will be watching the fate of the Amadeus IPO carefully.
In the Travelport-Amadeus IPO sweepstakes, it was considered an advantage to be the first one to go to the public-offering trough as the two firms competed for investors despite the somewhat disparate nature of their businesses.
Barring any last-minute move by Travelport, it would seem that Amadeus would make it to market first if it's IPO goes off successfully.
But, an Amadeus success might make Travelport a bit more enthusiastic about a second try and could affect its timing.
And, perhaps Travelport, unsuccessful in its European bid for a pubic offering, may consider New York instead of London the next time around.