Travelport bonus changes leave investors cold
* Tweaks bonus plan ahead of IPO close on Thursday
* Management, staff could still get $41 mln windfall
* Investors say the change "does not improve things"
* IPO rated "avoid" by IIIR analysts
By Raji Menon and Daisy Ku
LONDON, Feb 10 (Reuters) - Investors have scorned last-gasp changes to a planned $1.8 billion listing by airline ticketing firm Travelport, casting doubt on whether the issue will attract the long-term shareholders which mark a successful IPO.
The private-equity-owned travel services firm has tweaked part of its remuneration policy to cut the amount directors and staff would receive if operating profit growth went above 12 percent.
But investors targeted to participate in the listing said the cuts had not gone far enough and failed to ease more fundamental reservations about the company.
"This one-page addendum that we received yesterday only makes the whole thing worse. The more you look into it the more generous the scheme seems," said one UK fund manager.
The listing would be the biggest in London for almost two years.
Under a previous plan in the offering document, management and staff would receive as much as $33 million if Travelport's 2010 earnings before interest, tax, depreciation and amortisation (EBITDA) topped $662 million and an additional $24 million at over $708 million.
In a revised version, the amount payable over $708 million has been cut to a maximum of $8 million. It has not made any change to potential windfalls for over $662 million.
Travelport's EBITDA is estimated to be $631 million for 2009 and rise to between $630 million and $660 million in 2010, according to analysts.
The fund manager added: "It doesn't improve things at all and it doesn't really make us want to invest in Travelport any more than we did in the past. Without a doubt, the scheme is still generous."
One day before the scheduled close of the IPO, bookrunners have still to give an indication of interest in the offer,
A Travelport spokesman said: "It is a shareholder-friendly plan to push management to perform and only for such performance."
Another fund manager said: "Travelport seems to be stuck in the departure lounge and it's certainly going to be very difficult to get this one away."
"If the book was going well, they wouldn't have made the change," a third UK fund manager said.
"The fact that they have made the change and they have been responsive to what shareholders are saying means that certainly some big potential investors have wanted this change and they are quite eager to try and get this book done."
Many fund managers have said they are not interested in the offering due to poor aftermarket performance of recent IPOs.
"Some of the recent IPOs have been of very poor quality, Rusal (0486.HK), Taminco. This normally happens at the end of the issuance cycle, not at the start," said a fund manager.
UK asset manager Gartmore GRTR.L has fallen 16 percent since its $553 million listing in December. Taminco was scrapped and UC Rusal shares have dived 19 percent since a $2.2 billion dual listing in Hong Kong and Paris last month.
Travelport's IPO is rated "avoid" by London-based Independent International Investment Research.
"We do not expect significant return from the offering over our 6-24 month investment horizon," wrote IIIR analysts Ujwal Shah and Fathima Khan, who value Travelport shares at 266 pence each, 6.4 percent above the mid-point of the IPO price range of 210-290 pence per share.
U.S. private equity house Blackstone (BX.N) and Technology Crossover Ventures (TCV) bought Travelport for $4.3 billion from conglomerate Cendant in 2006.
Blackstone, whose 70 percent stake will fall to around 40 percent after the flotation, put in $775 million in equity and has already extracted a healthy return, collecting most of a $1 billion special dividend in 2007.
The private equity group will also receive $49 million in advisory fees from the IPO.
For a commentary by Reuters Breakingviews columnist Alex Smith, click on [ID:nLDE6120RP]
(Editing by David Cowell)
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