RLPC: Hilton shifts funds to longer-dated tranche, cuts pricing
NEW YORK, Sept 20
NEW YORK, Sept 20 (Reuters) - Hilton Worldwide Inc finalized tranche sizes on its new $8.6 billion credit backing a refinancing ahead of its initial public offering, sources told Thomson Reuters LPC.
The new credit will now include a $7.6 billion single tranche, seven-year term loan B-2, running alongside $1.5 billion in unsecured notes.
Previously, the company planned an $850 million, five-year term loan B-1, a $1.25 billion senior note issuance, and a $2 billion unsecured note issuance, in addition to a $5 billion, seven-year term loan B-2. The term loan B-1 and the senior note issuance have been eliminated. A $1 billion revolver rounds out the refinancing package.
Price talk on the TLB-2 is now LIB+300, with a 1 percent Libor floor at 99-99.5. Pricing includes a 25bp step-down after the completion of Hilton's IPO, and a 25bp step-down when net first-lien leverage is below 3.85 times.
The loan will carry 101 soft call protection for six months, and will amortize at the standard 1 percent.
Previously, the TLB-2 was guided at LIB+325-350, with a 1 percent Libor floor and an OID of 99. The TLB-2 will be covenant-lite.
Deutsche Bank is lead left on the loans, with Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley, JP Morgan, and Wells Fargo to the right. Books close at the end of today, and pricing is expected on Monday.
Corporate family ratings are B1/BB-, while secured ratings are Ba3/BB, and unsecured ratings are B3/B. The borrower on the credit is Hilton Worldwide Finance, LLC, sources added. Hilton expects to raise $1.25 billion from its initial public offering.
A commercial mortgage-backed securities loan at Hilton's domestic subsidiaries, and a new bank loan backed by Hilton's Waldorf-Astoria New York property will also be part of the refinancing package.
Hilton Worldwide serves 125 million guests annually at hotel brands including Waldorf Astoria, Hampton Inn, Conrad, Doubletree, and Embassy Suites.
In October 2007 Hilton was acquired by affiliates of The Blackstone Group. That transaction was financed with $20.6 billion of mortgage and mezzanine debt and approximately $5.7 billion of equity invested by the Blackstone Group.
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