8-KMaterial AgreementsFinancial EventsExhibits & Filings

MARRIOTT INTERNATIONAL INC /MD/ 8-K Report, Material Agreement (Nov 15, 2005)

Filed November 15, 2005For Securities:MAR

Summary

Marriott International, Inc. filed an 8-K report on November 15, 2005, detailing the issuance of new debt securities. The company issued $427.2 million in aggregate principal amount of 5.81 percent Series G Notes due November 10, 2015. These new notes were issued in exchange for existing debt, specifically $203.3 million of 7 percent Series E Notes due January 15, 2008, and $223.9 million of 7-7/8 percent Series C Notes due September 15, 2009. This transaction effectively refinances a portion of Marriott's outstanding debt, lowering the coupon rate from existing notes (7% and 7-7/8%) to 5.81%. The issuance was conducted as a private placement, and Marriott entered into a registration rights agreement to facilitate the exchange of these privately placed notes for registered notes, or potentially a shelf registration for resale, within specific timeframes. Failure to meet these registration deadlines could trigger penalty interest rates on the new notes.

Key Highlights

  • 1Issuance of $427.2 million in aggregate principal amount of 5.81% Series G Notes due 2015.
  • 2The new notes were issued via an exchange offer for existing 7% Series E Notes and 7-7/8% Series C Notes.
  • 3This refinancing strategy aims to reduce the company's overall interest expense by lowering coupon rates.
  • 4The new notes are general unsecured obligations of Marriott.
  • 5The issuance was a private placement, with a registration rights agreement in place for future registration.
  • 6Penalties, in the form of additional interest, may apply if registration deadlines are missed.
  • 7The registration rights agreement outlines specific dates for filing a registration statement for an exchange offer or a shelf registration.

Frequently Asked Questions

The primary purpose of this filing is to report the creation of a material definitive agreement and a direct financial obligation for Marriott International, Inc. Specifically, it announces the issuance of new debt (5.81% Series G Notes) and the associated registration rights agreement to make these debt securities publicly tradable or exchangeable.

Marriott is refinancing older, higher-interest debt (7% and 7-7/8% notes) with new, lower-interest debt (5.81% notes). This should lead to a reduction in Marriott's annual interest expense, improving profitability.

A Registration Rights Agreement is an agreement that obligates the issuer (Marriott) to register securities that were initially issued in a private placement. This is crucial because it allows holders of the privately placed notes to eventually sell them in the public market, either through an exchange offer for registered notes or by registering the resale of the existing notes. It mitigates liquidity risk for investors and facilitates compliance with securities laws for future trading.

If Marriott fails to meet the specified deadlines for filing the registration statement or for consummating the exchange offer (or making the shelf registration effective), penalty interest will accrue on the new notes. The additional interest rate starts at 0.25% per annum and can increase to a maximum of 0.50% per annum if the default continues, until all registration defaults are cured.