Expedia (EXPE -1.33%) announced a $3.2 billion lifeline designed to help the online travel company survive the COVID-19 pandemic.
In an announcement earlier Thursday, Expedia said its raising $3.2 billion in fresh capital consisting of a $1.2 billion investment by Apollo Global Management and Silver Lake, the two private equity firms, and $2 billion in new debt financing. The two PE firms will get non-voting and non-convertible preferred stock and seats on the board.
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Expedia is also suspending its dividend until business improves and announced its chairman, CEO, and board members will forgo cash compensation for the rest of 2020. Senior executives will see a 25% reduction in their salary. The tech stock is also furloughing an undisclosed number of employees but vowed to continue to pay their healthcare benefits. Its 401-K match program for U.S. employees will also be suspended for the rest of the year.
“We have one mandate – to conserve cash, survive, and use this time to reconstruct a stronger enterprise to serve the future of travel,” Barry Diller, chairman of Expedia said in a press release. “We are unable to make any predictions as to when travel will rebound but we emphatically believe that it will, for....'if there's life, there's travel.'" With travel coming to a halt as millions of people shelter in place around the world, the travel industry has been taking a big beating. Expedia isn't an exception.
In addition to announcing the capital infusion, Expedia named Peter Kern, a board member since 2005 and vice chairman since 2018 as its new CEO. Kern has been running the online travel company with chairman Barry Diller since CEO Mark Okerstrom left in December, Eric Hart, an executive at Expedia for more than a decade was named CFO.
