Summary
Hilton Worldwide Holdings Inc. (HLT) announced on April 21, 2020, through its indirect subsidiary Hilton Domestic Operating Company Inc., the issuance and sale of $1.0 billion in aggregate principal amount of senior notes. This offering comprises $500 million of 5.375% Senior Notes due 2025 and $500 million of 5.750% Senior Notes due 2028. The net proceeds are intended for general corporate purposes. This move strengthens Hilton's liquidity position, which is particularly relevant given the economic uncertainties at the time of the filing. The notes are senior unsecured obligations, guaranteed by Hilton Worldwide Holdings Inc. and other subsidiaries, ranking equally with existing and future senior indebtedness. The issuance includes provisions for optional redemption and repurchase rights for noteholders upon a change of control or certain asset sales. The indenture also imposes covenants on the Issuer and its restricted subsidiaries, limiting their ability to incur additional debt, pay dividends, or dispose of assets, while the parent entities are not directly subject to these restrictive covenants.
Key Highlights
- 1Hilton issued $1.0 billion in aggregate principal amount of senior notes, split equally between 5.375% Senior Notes due 2025 ($500 million) and 5.750% Senior Notes due 2028 ($500 million).
- 2The proceeds from the note issuance are designated for general corporate purposes, aimed at bolstering the company's financial flexibility.
- 3The Notes are senior unsecured obligations of Hilton Domestic Operating Company Inc., guaranteed by Hilton Worldwide Holdings Inc. and other subsidiaries.
- 4The new notes rank equally with the Issuer's other senior unsecured indebtedness.
- 5The indenture allows for optional redemption of the notes, with varying redemption prices and dates, including provisions for 'make-whole' premiums and partial redemptions using proceeds from equity offerings.
- 6Noteholders have the right to demand repurchase of their notes at 101% of par (change of control) or 100% of par (asset sale), plus accrued interest, under specified conditions.
- 7Covenants are in place to restrict the Issuer and its restricted subsidiaries from certain actions like incurring additional debt or paying dividends, though parent companies are not directly bound by these specific covenants.