Eurazeo, Primavera-owned WorldStrides files for bankruptcy

The company organizes educational travel and other programs for more than 550,000 students every year, but its business has been "decimated" by the coronavirus outbreak and consequent restrictions on non-essential travel. WorldStrides has $768 million in outstanding debt and estimates it will need $200 million in liquidity over the next 24 months to refund customer deposits.

Holders of approximately 85% of the loans have supported a restructuring led by the existing private equity owners, as per court filings on Debtwire. A $366 million debtor-in-possession facility is proposed, comprising $108 million in new term loans from the lenders and $108 million in new term loans provided by the PE sponsors, which will ultimately be exchanged for common stock. A further a $150 million in existing facilities will be refinanced and $2 million in letters of credit rolled over.

The court documents state that creditors have a strong long-term outlook when considering pre-COVID-19 operating performance. WorldStrides' biggest revenue driver remains relatively short duration trips aimed at K-12 students that take in sites of cultural and historical significance in the US. This is followed by longer international trips and programs across 30 countries for undergraduates and graduates. It partners with over 7,000 K-12 schools and 800 universities.

When Eurazeo and Primavera bought the business in 2017 – the former paid $500 million for a majority stake, while the latter picked up a minority stake for an undisclosed sum – they were keen to support expansion in Europe and Asia. The sellers were Metalmark Capital and Silverhawk Capital Partners, which bought WorldStrides from The Carlyle Group in 2016. 

"We were bidding for the asset and quite late in the process we felt there was a strong China angle because demand for travel education is very high. We decided it would be a good idea to partner with a local private equity firm that had deep knowledge of the education market in order to accelerate growth in China. Primavera came into the picture and took a minority stake," Eddie Chen, Eurazeo's China head, told AVCJ in 2018.

Projected revenue for the year ending June 2021 is $367.9 million – including $65.7 million in insurance payouts – rising to $718.1 million in 2022. Over the same period, EBITDA is expected to increase from $38 million to $64.7 million while the net loss widens from $2.2 million to $101.4 million. Revenue for the year ended June 2017 was in excess of $580 million. Financial performance for the most recent year has not been disclosed.

Primavera invested in WorldStrides out of its second US dollar-denominated fund, which closed in 2016 at $1.93 billion. It has since raised $3.4 billion for a successor vehicle. While the GP primarily targets China-based companies, it also participates in cross-border deals that have a China angle.

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• Topics
• Greater China
• Europe
• North America
• Consumer
• Restructuring
• China
• Education
• USA
• Eurazeo
• Primavera