Summary
Hilton Worldwide Holdings Inc. (HLT) filed an 8-K on June 24, 2019, to disclose a significant financing event. On June 20, 2019, Hilton's indirect subsidiary, Hilton Domestic Operating Company Inc., issued $1.0 billion in aggregate principal amount of 4.875% Senior Notes due 2030. These notes were issued at par and bear a fixed interest rate, payable semi-annually. The primary use of proceeds is to repay borrowings under the company's senior secured credit facilities, specifically $500.0 million of term B-2 loans, with any remaining funds allocated for general corporate purposes, which may include share repurchases. The filing also details the senior unsecured nature of these notes, guaranteed by Hilton Worldwide Holdings Inc. and other subsidiaries. The notes include provisions for optional redemption by the issuer and repurchase rights for holders under certain change of control or asset sale events. Additionally, the company entered into a Registration Rights Agreement to facilitate an exchange offer for these notes, with provisions for increased interest rates should registration obligations not be met. An amendment to the company's credit agreement was also executed to reflect the prepayment of term B-2 loans, altering maturity dates and amortization schedules for the remaining balances.
Key Highlights
- 1Issuance of $1.0 billion in 4.875% Senior Notes due 2030 by Hilton Domestic Operating Company Inc.
- 2Proceeds intended to repay $500 million in term B-2 loans under senior secured credit facilities and for general corporate purposes, potentially including share repurchases.
- 3The Notes are senior unsecured obligations of the Issuer, guaranteed by Hilton Worldwide Holdings Inc. and other subsidiaries.
- 4The Indenture includes covenants restricting the ability of certain subsidiaries to incur additional debt, pay dividends, make investments, and dispose of assets.
- 5Holders have the right to require repurchase of notes upon a change of control triggering event or certain asset sales.
- 6A Registration Rights Agreement was entered into, obligating Hilton to file for an exchange offer registration statement for the Notes, with potential interest rate increases for non-compliance.
- 7Amendment No. 6 to the Credit Agreement was executed, reflecting the prepayment of term B-2 loans and adjusting maturity and amortization for the remaining balance.