Hilton Announces Pricing of Senior Notes Offering
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Insights
The offering of Senior Notes by Hilton Domestic Operating Company Inc., a subsidiary of Hilton Worldwide Holdings Inc., is a significant move in the company's financial strategy. The issuance of $550 million of 5.875% Senior Notes due 2029 and $450 million of 6.125% Senior Notes due 2032 indicates a proactive approach to capital management. This action is likely to affect the company's leverage and interest expense profile, potentially influencing its credit ratings and stock valuation.
Investors should note the interest rates attached to these notes, which are relatively high compared to current U.S. Treasury rates. This suggests that Hilton is compensating investors for taking on additional risk associated with the company's credit profile. The intended use of proceeds for general corporate purposes, including the repayment of existing debt, could improve the company's debt maturity profile and liquidity position. However, the impact on the company's financial flexibility and overall cost of capital will depend on the terms of the debt being repaid and the opportunities pursued with the remaining funds.
Hilton's decision to issue Senior Notes and the chosen interest rates reflect broader market conditions and investor appetite for corporate debt. In the hospitality industry, access to capital is essential for maintaining and expanding operations, especially in a post-pandemic recovery phase. The move to secure long-term financing could be indicative of Hilton's confidence in its business model and future growth prospects.
It's important to recognize the competitive landscape in which Hilton operates. The company's ability to secure favorable terms despite the relatively high-interest rates could signal strength and stability to investors. On the other hand, the market's reception of these notes will also provide insight into how investors view the risk associated with the hospitality sector as it recovers from global disruptions.
The issuance of Senior Notes by Hilton is structured to comply with securities regulations, specifically leveraging exemptions under Rule 144A and Regulation S of the Securities Act of 1933. This approach allows Hilton to target institutional investors and certain non-U.S. persons without the burden of a public registration. The legal intricacies of such offerings are important for ensuring the company's compliance and minimizing legal risk.
Investors should be aware that the Notes are not registered under the Securities Act, which means they are subject to certain transfer restrictions and may lack the liquidity of publicly traded securities. The reliance on exemptions also underscores the targeted nature of the offering, aimed at sophisticated investors capable of evaluating the risks associated with the investment.
The Notes 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
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
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Investor Contact
Jill Chapman
+1 703 883 1000
Media Contact
Kent Landers
+1 703 883 3246
Source: Hilton Worldwide Holdings Inc.
FAQ
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