Amadeus has not officially announced it plans to go public, but launched a pre-IPO loan amendment this week to allow a rights issue and appointed Goldman Sachs, JP Morgan and Morgan Stanley in October to advise on the flotation.
The Madrid-headquartered company has around 3.4 billion euros of total net debt and 4.1 billion euros of total gross debt left, the sources said.
A 910 million euros repayment would bring the company's total net debt to EBITDA ratio to less than 3.5 times, from around 3.9 times currently, according to the sources.
Amadeus's lenders are now considering the company's pre-IPO loan amendment in what a source close to the talks described as a 'house-keeping exercise'.
Some investors are concerned that the company will be too heavily indebted even after the IPO and loan repayment - most companies that are heading for IPOs are targeting leverage of 2.5-3.5 times.
Amadeus' post-IPO leverage of 3.5 times is higher than German chemical distributor Brenntag's proposal of around 2.8 times leverage, UK fund manager Gartmore's 2.5 times leverage and theme parks operator Merlin, which is aiming for leverage of roughly 2.8 times, one banker said.
'That (leverage) is still pretty high, and much higher than other IPOs, which see leverage in the region of 2.5-3 times,' the banker said.
French care homes operator Medica, however, will have leverage of 4-4.5 times after its IPO, sources said.
Amadeus, which is also seeking to remove a covenant governing capital expenditure, is offering to increase the interest margin it pays on the loan by 125 basis points.
There is also a 50 bps fee, plus 25 bps for banks committing on an 'early bird' basis by Dec. 11.
According to Thomson Reuters LPC data, Amadeus' 5.2 billion euro loan signed in 2007 paid initial interest margins of 225-250 bps over EURIBOR.
The final deadline for Amadeus' pre-IPO amendment, which is in the market via agent JP Morgan, is Dec. 17.
Amadeus is controlled by private equity firms BC Partners and Cinven with 52.8 percent, Air France with 23.14 percent and Iberia and Lufthansa with 11.57 percent each.
(Reporting by Zaida Espana; Editing by David Cowell) ($1=.6635 Euro) Keywords: AMADEUS/LOAN (zaida.espana@reuters.com; +44-20-7542-7996; Reuters Messaging zaida.espana@reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
