NEWS...=Navigant Intl Eyes Acquisition Trail; Plans Debt Offer
Dow Jones News Service via Dow Jones
By Tom Locke
DENVER (Dow Jones)--Navigant International Inc. (FLYR) plans to get back on
the acquisition trail in 1999 and is hoping to do so with the help of $100
million in new financing later this quarter.
The debt offering might be private or public and the Englewood, Colo.,
corporate travel company is talking to Salomon Smith Barney and NationsBanc
Montgomery Securities Inc. about leading the offering in the first calendar
quarter, Chief Executive Edward Adams told Dow Jones. "We've been assured that
we can get it done."
The proceeds from the offering would be used for acquisitions and would put
the company back on track for its target of acquiring enough travel companies to
add $25 million in revenue per quarter, Adams said.
The acquisition strategy is key to Navigant's plan to grow in order to deal
with the brave new world of airline cuts on commissions paid to travel
companies. By becoming a bigger company, Navigant figures it can negotiate
better discounts and cut costs by eliminating duplication among its acquired
agencies.
Already, it is the fifth-largest U.S. travel management company, with airline
ticket sales of about $2 billion a year and 438 regional travel offices.
But its growth is dependent on financing. And without factoring in a large
first-quarter debt offering, analysts' reports last month curbed expectations on
Navigant's acquisition growth. For instance, Salomon Smith Barney analyst Lisa
daCosta lowered her revenue projections for Navigant's fiscal year ending April
2000 to $243 million from $291 million, based on reduced borrowing expectations.
Navigant's 1998 plans to expand its bank line of credit to $150 million from
$60 million were squelched by last year's third-quarter credit crunch. So
daCosta dropped her expectations to acquisitions of $70 million, instead of $120
million, in annualized revenue over the next 18 months.
But Adams said that if the $100 million debt offering goes through as planned,
"we're back on track to do the $120 (million)." And that would put Navigant back
in the range of $291 million in revenue for fiscal 2000.
As for fiscal 1999, daCosta's revenue projection of $192 million is "pretty
close," Chief Financial Officer Robert C. Griffith said. It compares with actual
revenue in fiscal 1998 of $120 million.
DaCosta's December report didn't change her earnings forecast for 2000,
leaving it at $1 a share. That is because she expected lowered revenue to be
balanced by lowered expenses in amortization, interest, and other areas.
The First Call Corp. average earnings estimate for Navigant in fiscal 2000 is
99 cents a share. Excluding one-time items, that compares with 71 cents
projected for fiscal 1999 and 48 cents realized in fiscal 1998.
"We're comfortable with all the numbers that are out there, on a per share
basis, through fiscal 2000," Griffith said.
That includes the First Call average earnings estimate of 6 cents a share for
the fiscal third quarter ending in January, he said.
(MORE) DOW JONES NEWS 01-11-99
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