8-KMaterial AgreementsFinancial EventsExhibits & Filings

Hilton Worldwide Holdings Inc. 8-K Report, Material Agreement (Jun 24, 2019)

Filed June 24, 2019For Securities:HLT

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.

Frequently Asked Questions

The primary purpose of issuing the $1.0 billion in 4.875% Senior Notes due 2030 is to refinance existing debt. Specifically, $500.0 million of the proceeds will be used to repay borrowings under the company's senior secured credit facilities (Term Loan Prepayment). The remaining proceeds are designated for general corporate purposes, which may include funding share repurchases.

The Senior Notes have a fixed interest rate of 4.875% per annum, payable semi-annually on January 15 and July 15, beginning January 15, 2020. The notes mature on January 15, 2030.

The Notes are senior unsecured obligations of Hilton Domestic Operating Company Inc. They are guaranteed on a senior unsecured basis by Hilton Worldwide Holdings Inc. (the Company), Hilton Worldwide Parent LLC, Hilton Worldwide Finance LLC, and certain other wholly owned subsidiaries that guarantee other indebtedness of the company.

In the event of a 'change of control triggering event' or the sale of certain assets (where proceeds are not used as required), holders of the Notes have the right to require the Issuer to repurchase their notes. The repurchase price will be 101% of the principal amount for a change of control event, and 100% of the principal amount for an asset sale event, plus accrued and unpaid interest.