Hyatt Announces Pricing of Public Offering of Senior Notes
Hyatt Hotels (NYSE: H), a global hospitality leader, announced the pricing of its public offering of senior notes totaling $800 million. The offering includes $450 million of senior notes due 2029 with a 5.25% annual interest rate and $350 million of senior notes due 2034 with a 5.50% annual interest rate. The closing is expected on June 17, 2024, subject to customary conditions. Proceeds will be used to repay Hyatt's 1.800% notes due 2024 and for general corporate purposes. BofA Securities, Deutsche Bank Securities, J.P. Morgan, and Scotiabank are managing the offering.
- Pricing of senior notes brings $800 million in capital.
- Interest rates set at 5.25% for 2029 notes and 5.50% for 2034 notes.
- Proceeds aimed at repaying 1.800% notes due 2024, improving debt profile.
- Excess proceeds to be used for general corporate purposes, enhancing financial flexibility.
- Established underwriters (BofA Securities, Deutsche Bank, J.P. Morgan, Scotiabank) managing the offering.
- Shelf registration statement automatically effective, streamlining the process.
- Increased annual interest obligations due to higher rates (5.25% and 5.50%) compared to the 1.800% notes being repaid.
- Potential dilution of future earnings due to higher interest payments.
- Uncertainty around remaining proceeds use, which may not yield immediate returns.
Insights
Hyatt's recent announcement about the pricing of $450,000,000 and $350,000,000 aggregate principal amount of senior notes due 2029 and 2034 respectively is a important move from a financial perspective. These new notes with interest rates of 5.25% and 5.50% are intended to refinance the company’s existing 1.800% notes due 2024 and cover any remaining funds for general corporate purposes. This will effectively extend the company's debt maturity profile, locking in a moderate interest rate in the current market.
The fixed rates of 5.25% and 5.50% are higher compared to their previous 1.800% notes, indicating potentially higher interest expense over time. However, given the market's current interest rate environment, these rates could be seen as relatively favorable and reflect the company's solid credit standing.
In the short term, investors might be concerned about the increased interest expenses, but in the long term, the extended maturities provide a more stable financial outlook. This refinancing strategy could also hint at the company's expectations of favorable business performance and cash flow stability sufficient to cover these new obligations.
It's also important to note that the company's ability to issue these notes suggests robust market confidence in its creditworthiness. For a retail investor, this move can be seen as generally positive, with the caveat of higher interest expenses balanced by improved financial stability.
From a market research perspective, the issuance of these senior notes signals Hyatt's strategic approach to managing its capital structure amidst fluctuating interest rates. The new notes' pricing aligns Hyatt with broader market trends where companies anticipate potential hikes in interest rates and aim to secure longer-term financing at current rates.
This refinancing action not only mitigates short-term maturity risks but also provides additional liquidity for potential expansion or operational investments. Maintaining liquidity and flexibility is important for hospitality companies, particularly given the industry's recovery phase post-pandemic. This move can reinforce market confidence in Hyatt's ability to navigate financial turbulence and capitalize on growth opportunities.
Furthermore, Hyatt's choice of underwriters—BofA Securities, Deutsche Bank Securities, J.P. Morgan and Scotiabank—reflects a strong endorsement from top-tier financial institutions, which could bolster investor confidence further.
For retail investors, this development highlights Hyatt's proactive financial management, positioning it well to sustain and potentially enhance its market position in a competitive landscape.
The offering is expected to close on June 17, 2024, subject to customary closing conditions.
The Company intends to use the net proceeds of the offering to repay all of the Company’s
BofA Securities, Inc., Deutsche Bank Securities, J.P. Morgan and Scotiabank are acting as representatives of the underwriters and joint book-running managers for the offering.
The offering is being made pursuant to a shelf registration statement on Form S-3, including a base prospectus, that was filed by the Company with the Securities and Exchange Commission (the “SEC”) and became automatically effective upon filing on August 30, 2023. A preliminary prospectus supplement and accompanying prospectus relating to and describing the terms of the offering was filed with the SEC and is available on the SEC’s website located at www.sec.gov. Copies of the final prospectus supplement and the accompanying prospectus relating to the securities being offered may also be obtained by contacting: BofA Securities, Inc. at +1 800-294-1322, Deutsche Bank Securities Inc. at +1 800-503-4611, J.P. Morgan Securities LLC toll-free at +1 212-834-4533 and Scotia Capital (
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Hyatt Hotels Corporation
Hyatt Hotels Corporation, headquartered in
FORWARD-LOOKING STATEMENTS
Forward-Looking Statements in this press release, which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements about the offering and the Company’s intended use of proceeds from the offering, the Company’s plans, strategies, outlook, financial performance, projections, financing proposals, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the rate and pace of economic recovery following economic downturns; global supply chain constraints and interruptions, rising costs of construction-related labor and materials, and increases in costs due to inflation or other factors that may not be fully offset by increases in revenues in our business; risks affecting the luxury, resort, and all-inclusive lodging segments; levels of spending in business, leisure, and group segments, as well as consumer confidence; declines in occupancy and average daily rate; limited visibility with respect to future bookings; loss of key personnel; domestic and international political and geo-political conditions, including political or civil unrest or changes in trade policy; hostilities, or fear of hostilities, including future terrorist attacks, that affect travel; travel-related accidents; natural or man-made disasters, weather and climate-related events, such as earthquakes, tsunamis, tornadoes, hurricanes, droughts, floods, wildfires, oil spills, nuclear incidents, and global outbreaks of pandemics or contagious diseases, or fear of such outbreaks; our ability to successfully achieve certain levels of operating profits at hotels that have performance tests or guarantees in favor of our third-party owners; the impact of hotel renovations and redevelopments; risks associated with our capital allocation plans, share repurchase program, and dividend payments, including a reduction in, or elimination or suspension of, repurchase activity or dividend payments; the seasonal and cyclical nature of the real estate and hospitality businesses; changes in distribution arrangements, such as through internet travel intermediaries; changes in the tastes and preferences of our customers; relationships with colleagues and labor unions and changes in labor laws; the financial condition of, and our relationships with, third-party owners, franchisees, and hospitality venture partners; the possible inability of third-party owners, franchisees, or development partners to access the capital necessary to fund current operations or implement our plans for growth; risks associated with potential acquisitions and dispositions and our ability to successfully integrate completed acquisitions with existing operations; failure to successfully complete proposed transactions (including the failure to satisfy closing conditions or obtain required approvals); our ability to successfully execute our strategy to expand our management and hotels services and franchising business while at the same time reducing our real estate asset base within targeted timeframes and at expected values; our ability to maintain effective internal control over financial reporting and disclosure controls and procedures; declines in the value of our real estate assets; unforeseen terminations of our management and hotels services or franchise agreements; changes in federal, state, local, or foreign tax law; increases in interest rates, wages, and other operating costs; foreign exchange rate fluctuations or currency restructurings; risks associated with the introduction of new brand concepts, including lack of acceptance of new brands or innovation; general volatility of the capital markets and our ability to access such markets; changes in the competitive environment in our industry, industry consolidation, and the markets where we operate; our ability to successfully grow the World of Hyatt loyalty program and Unlimited Vacation Club paid membership program; cyber incidents and information technology failures; outcomes of legal or administrative proceedings; and violations of regulations or laws related to our franchising business and licensing business and our international operations; and other risks discussed in the Company’s filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q, which filings are available from the SEC. We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this press release. We do not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
HHC-FIN
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Hyatt Media Contact:
Franziska Weber
franziska.weber@hyatt.com
Hyatt Investor Contacts:
Adam Rohman
adam.rohman@hyatt.com
Tara
tara.atwood@hyatt.com
Source: Hyatt Hotels Corporation
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