Choice Hotels Announces Pricing Of Senior Notes Offering
Choice Hotels International announced the pricing of $600 million in senior notes through an underwritten, registered public offering. The notes, maturing on August 1, 2034, will bear an interest rate of 5.850% and be issued at 98.929% of par value. The proceeds will mainly repay a $500 million unsecured term loan, with remaining funds for general corporate purposes. The offering, expected to close by July 2, 2024, is under an automatic shelf registration statement filed with the SEC. The joint book-running managers for the offering include Wells Fargo Securities, BofA Securities, Goldman Sachs, and Truist Securities.
- Choice Hotels successfully priced $600 million senior notes, demonstrating strong market confidence.
- The notes bear a favorable interest rate of 5.850%, maturing in 2034.
- Proceeds will be effectively used to repay a $500 million unsecured term loan, improving financial stability.
- The senior notes are issued at 98.929% of par value, indicating a slight discount.
Insights
The issuance of senior notes by Choice Hotels International, Inc. is a significant event, particularly given the aggregate principal amount of
For investors, the issuance of these notes and the intended use of proceeds can be seen as a prudent financial management step. However, the interest rate of 5.850% is relatively high, suggesting higher borrowing costs, which might be indicative of market conditions or the company's credit profile. The notes are also issued at 98.929% of par value, meaning investors are purchasing them at a slight discount, which could be attractive to some investors looking for fixed-income securities.
In the short term, the repayment of the $500 million loan can be seen positively as it indicates a reduction in debt maturity risk. In the long term, the issuance of these notes affects the company's leverage ratio and interest obligations, which investors will need to monitor. The use of remaining proceeds for general corporate purposes is somewhat generic but provides financial flexibility.
This move by Choice Hotels International, Inc. reflects broader trends in the market where companies are issuing debt to manage and restructure their financial obligations. The issuance of $600 million in senior notes indicates that the company is leveraging current market conditions to secure funding. The interest rate of 5.850% provides a clear signal to the market about the company’s perceived credit risk and borrowing costs.
For retail investors, understanding the implications of these notes is crucial. The market perception of the company’s ability to service this debt will be a focal point. The fact that the notes are unsecured and unsubordinated suggests that these are not backed by specific assets, which can be riskier compared to secured debt but is standard for many corporate issuances. The maturity date of August 1, 2034 allows for a long-term view of the company's financial health and capital management strategies.
Overall, this debt issuance can be viewed favorably from a market perspective, indicating the company’s proactive financial management. However, investors must remain vigilant on how effectively the company utilizes the proceeds and its ongoing debt servicing ability.
The notes will mature on August 1, 2034, will bear interest at a rate of
The Company intends to use the net proceeds from the offering to repay its
Wells Fargo Securities, LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC and Truist Securities, Inc. are acting as joint book-running managers for the offering. The offering may be made only by means of a preliminary prospectus supplement and the accompanying prospectus. A copy of the preliminary prospectus supplement and the accompanying prospectus related to the offering may be obtained from any of the following: Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000,
A copy of the prospectus included in the registration statement may also be obtained from the SEC's website at www.sec.gov.
This press release shall not constitute an offer to sell nor the solicitation of an offer to buy any security, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
About Choice Hotels ®
Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world, with nearly 7,500 hotels, representing more than 630,000 rooms, in 45 countries and territories as of March 31, 2024. A diverse portfolio of 22 brands that range from full-service upper upscale properties to midscale, extended stay, and economy enables Choice® to meet travelers' needs in more places and for more occasions while driving more value for franchise owners and shareholders. The award-winning Choice Privileges® rewards program and co-brand credit card options provide members with a fast and easy way to earn reward nights and personalized perks.
Forward-Looking Statements
When used within this press release, the words "expects," "believes," "anticipates," "plans," "would," "should," "may," "estimates," and similar expressions are intended to identify "forward-looking statements," including but not limited to, statements about the completion, timing, and size of the proposed offering of securities by the Company and the use of net proceeds of such offering. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause our actual results to be materially different from those expressed or implied in the forward-looking statements. Such factors include market conditions and the demand for the Company's securities, as well as the risks detailed in the Company's preliminary prospectus supplement and the accompanying prospectus filed with the SEC in connection with this offering and in the Company's other filings with the SEC, including our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
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SOURCE Choice Hotels International, Inc.
FAQ
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