Hilton Announces Launch of Senior Notes Offering

Rhea-AI Summary

Hilton Worldwide Holdings Inc. announces a $1.0 billion offering of Senior Notes due 2029 and 2032 by its subsidiary, Hilton Domestic Operating Company Inc. The proceeds will be used for general corporate purposes, debt repayment, investments, and acquisitions. The Notes are not registered under the Securities Act of 1933 and are offered to qualified institutional buyers and certain non-U.S. persons.

Insights

Financial Analyst

Hilton's decision to issue $1.0 billion in Senior Notes is a strategic move to optimize its capital structure. By earmarking funds for the repayment of existing debt and potential investments and acquisitions, the company is positioning itself to maintain a healthy liquidity profile while pursuing growth opportunities. The use of the proceeds indicates a proactive approach to managing its debt obligations and a focus on strategic expansion, which are key factors in assessing a company's financial health and future prospects.

Investors should note that the issuance of unregistered securities limits the potential buyer pool to qualified institutional buyers and certain non-U.S. persons, which may impact the liquidity and marketability of these notes. However, this approach allows Hilton to access capital more quickly and with potentially lower costs than a public offering, reflecting a savvy use of regulatory exemptions to benefit its financial strategy.

Market Research Analyst

The hospitality industry is highly capital-intensive, with significant investments required for property acquisitions, renovations and technology upgrades. Hilton's move to issue Senior Notes suggests anticipation of favorable market conditions and a readiness to capitalize on strategic opportunities. It is indicative of the company's confidence in its ability to generate future revenue streams capable of servicing this new debt.

From a market perspective, this issuance could signal Hilton's assessment that the cost of borrowing is attractive relative to the potential return on investments made with the proceeds. This can be seen as a positive sign of the company's growth trajectory and operational efficiency, which could influence investor sentiment and the stock's performance in the hospitality sector.

Legal Expert

The legal framework surrounding the issuance of the Senior Notes by Hilton is complex, involving exemptions from registration under the Securities Act of 1933. The reliance on Rule 144A and Regulation S indicates a targeted approach to fundraising, which is tailored to sophisticated investors capable of evaluating the risks associated with unregistered securities.

For stakeholders, it's important to understand the legal implications of such a financial instrument. The limited disclosure requirements for private placements compared to public offerings can result in less transparency for investors. However, the compliance with Rule 135c for this announcement helps ensure that the company is adhering to the legal standards for communication about unregistered securities offerings.

MCLEAN, Va.--(BUSINESS WIRE)-- Hilton Worldwide Holdings Inc. (NYSE: HLT) (“Hilton”) announced today that its indirect subsidiary Hilton Domestic Operating Company Inc. (the “Issuer”) intends to offer $1.0 billion aggregate principal amount of the Issuer’s Senior Notes due 2029 and Senior Notes due 2032 (collectively, the “Notes”). The Issuer intends to use the net proceeds of the offering for general corporate purposes, including the repayment of $200 million of indebtedness under the senior secured revolving credit facility, investments and acquisitions.

The Notes to be offered have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The Notes may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes will be offered by the initial purchasers only to persons reasonably believed to be “qualified institutional buyers” in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.

This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act, and it is neither an offer to sell nor a solicitation of an offer to buy any securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to Hilton’s expectations regarding the performance of its business, Hilton’s future financial results, liquidity and capital resources and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “forecasts,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties including, among others, risks inherent to the hospitality industry; macroeconomic factors beyond Hilton’s control, such as inflation, changes in interest rates, challenges due to labor shortages or disputes and supply chain disruptions; competition for hotel guests and management and franchise contracts; risks related to doing business with third-party hotel owners; performance of Hilton’s information technology systems; growth of reservation channels outside of Hilton’s system; risks of doing business outside of the United States; risks associated with conflicts in Eastern Europe and the Middle East and other geopolitical events; and Hilton’s indebtedness. Accordingly, there are or will be important factors that could cause Hilton’s actual outcomes or results to differ materially from those indicated on these statements. Hilton believes these factors include, but are not limited to, those described under the section entitled “Part I—Item 1A. Risk Factors” of Hilton’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in Hilton’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in Hilton’s filings with the SEC. Hilton undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240321439945/en/

Investor Contact

Jill Chapman

+1 703 883 1000



Media Contact

Kent Landers

+1 703 883 3246

Source: Hilton Worldwide Holdings Inc.

FAQ

What is the purpose of Hilton's $1.0 billion offering of Senior Notes?

The offering is intended for general corporate purposes, debt repayment, investments, and acquisitions.

Under which regulations are the Notes being offered?

The Notes are being offered under Rule 144A and Regulation S under the Securities Act.

Are the Notes registered under the Securities Act of 1933?

No, the Notes have not been registered under the Securities Act.

Who are the intended buyers of the Notes?

The Notes will be offered to qualified institutional buyers and certain non-U.S. persons.

What is the total aggregate principal amount of the Notes being offered?

The Issuer intends to offer $1.0 billion aggregate principal amount of Senior Notes.

What will the net proceeds of the offering be used for?

The net proceeds will be used for general corporate purposes, debt repayment, investments, and acquisitions.