Hilton Announces Pricing of Senior Notes Offering

Rhea-AI Summary

Hilton Worldwide Holdings Inc. (NYSE: HLT) has announced that its indirect subsidiary, Hilton Domestic Operating Company Inc., has finalized the terms of a $1.0 billion senior notes offering. The notes, due in 2033, will carry a 5.875% interest rate. The offering is expected to close on September 9, 2024, subject to customary conditions. Hilton intends to use the net proceeds for general corporate purposes. The notes are being offered only to qualified institutional buyers and certain non-U.S. persons in offshore transactions, in compliance with Securities Act regulations. This offering is not registered under the Securities Act and is not available to the general public.

Positive

• Successful pricing of $1.0 billion in senior notes
• 5.875% interest rate secured for the notes
• Potential to strengthen Hilton's financial position through additional capital

Negative

• Increased long-term debt obligation
• Higher interest expenses due to the new notes

Insights

Financial Analyst

Hilton's $1 billion senior notes offering at 5.875% interest rate, maturing in 2033, signifies a strategic move to capitalize on the current market conditions. This debt issuance allows Hilton to secure long-term financing at a relatively attractive rate, considering the recent upward trend in interest rates. The "general corporate purposes" designation for the proceeds provides flexibility, potentially funding expansions, renovations, or debt refinancing.

However, investors should note that this additional debt will increase Hilton's leverage and interest expenses. The impact on the company's credit profile and future borrowing capacity needs careful consideration. The pricing and demand for these notes will be important indicators of market confidence in Hilton's long-term prospects and the hospitality sector's recovery post-pandemic.

Legal Expert

The offering's structure as 144A and Regulation S is significant, limiting initial sales to qualified institutional buyers and non-U.S. persons. This approach allows Hilton to access capital markets quickly without the time and expense of SEC registration. However, it also means reduced liquidity for these notes in the secondary market.

The disclaimer language is standard but crucial, protecting Hilton from potential securities law violations. Investors should be aware that these unregistered notes carry different risks and less transparency than publicly registered securities. The planned September 2024 closing date gives ample time for due diligence and market positioning, suggesting confidence in the offering's success despite potential market volatility.

MCLEAN, Va.--(BUSINESS WIRE)-- Hilton Worldwide Holdings Inc. (NYSE: HLT) (“Hilton”) announced today that its indirect subsidiary Hilton Domestic Operating Company Inc. (the “Issuer”) finalized the terms of the Issuer’s offering of $1.0 billion aggregate principal amount of 5.875% Senior Notes due 2033 (the “Notes”). The Issuer anticipates that consummation of the offering will occur on September 9, 2024, subject to customary closing conditions, and intends to use the net proceeds of the offering for general corporate purposes.

The Notes offered have not been and will not be 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 were 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; the loss of key senior management personnel; 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/20240905755028/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 size and interest rate of Hilton's (HLT) new senior notes offering?

Hilton (HLT) has priced a $1.0 billion senior notes offering with an interest rate of 5.875%.

When is the expected closing date for Hilton's (HLT) senior notes offering?

The senior notes offering by Hilton (HLT) is expected to close on September 9, 2024, subject to customary closing conditions.

What will Hilton (HLT) use the proceeds from the senior notes offering for?

Hilton (HLT) intends to use the net proceeds from the senior notes offering for general corporate purposes.

Are Hilton's (HLT) new senior notes available for purchase by the general public?

No, Hilton's (HLT) new senior notes are not available to the general public. They are only offered to qualified institutional buyers and certain non-U.S. persons in offshore transactions.