Wyndham Worldwide Corporation
) announced the completion of a $1.5 billion credit agreement
yesterday. The new credit facility replaces Wyndham's existing
line of credit worth $1 billion to lower interest costs.
Besides paying down the company's high-cost debt, the new credit
facility will extend the maturity period of the debt. The new
credit facility will mature in Jul 2018 while the existing line
of credit was scheduled to expire in Jul 2016.
The company believes that the new credit facility will
strengthen its financial position. However, Wyndham's overall
debt balance will remain unchanged following the transaction.
The company's long-term debt was $2.7 billion as of Mar 31,
2013. At the end of the first quarter of 2013, the debt level was
$360 million higher than 2012 levels. The leverage ratio was also
above Wyndham's expected range. However, management expects the
leverage position to revert to its targeted range over the rest
of the year with growing EBITDA.
Free cash flow in the recently-concluded first-quarter 2013
was $1.69 per share compared with $1.31 per share in the
comparable period of last year. Wyndham is capable of generating
attractive free cash flow. Management intends to generate $750
million in free cash flow in 2013 which is higher than the
Wyndham currently carries a Zacks Rank #3 (Hold). Other
players in the leisure and recreational industry, which look
attractive at current levels, include
Life Time Fitness Inc.
The Madison Square Garden Company
), both carrying a Zacks Rank #2 (Buy). Another company, which
sells recreational products,
Sturm, Ruger & Co. Inc.
), can also be considered as it carries a Zacks Rank #1 (Strong
LIFE TIME FITNS (LTM): Free Stock Analysis
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STURM RUGER&CO (RGR): Free Stock Analysis
WYNDHAM WORLDWD (WYN): Free Stock Analysis
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