Hilton Worldwide Holdings Inc. (NYSE:HLT) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry Into a Material Definitive Agreement. |
Indenture with respect to 4.625% Senior Notes due
2025 and 4.875% Senior Notes due 2027
On March16, 2017, Hilton Worldwide Finance LLC (the Issuer) and
Hilton Worldwide Finance Corp. (the Co-Issuer and, together with
the Issuer, the Issuers), each an indirect subsidiary of Hilton
Worldwide Holdings Inc. (the Company), issued $1,500million of
senior notes consisting of (i) $900million aggregate principal
amount of 4.625% Senior Notes due 2025 (the 2025 Notes) and (ii)
$600million aggregate principal amount of 4.875% Senior Notes due
2027 (the 2027 Notes and, together with the 2025 Notes, the
Notes), in each case, under an Indenture, dated as of March16,
2017 (the Indenture), by and among the Issuers, the Company, as a
guarantor, and the other guarantors party thereto, and Wilmington
Trust, National Association, as trustee (in such capacity, the
Trustee). The Notes were sold within the United States only to
qualified institutional buyers in reliance on Rule 144A under the
Securities Act of 1933, as amended (the Securities Act), and
outside the United States to non-U.S. persons in reliance on
Regulation S under the Securities Act.
The Notes were issued at 50% of their par value and bear interest
at a rate of 4.625% per annum, in the case of the 2025 Notes, and
4.875% per annum, in the case of the 2027 Notes. Interest on each
series of Notes is payable semi-annually in arrears on April1 and
October1, beginning October1, 2017. The 2025 Notes mature on
April1, 2025 and the 2027 Notes mature on April1, 2027.
The net proceeds of the offering, together with available cash,
were used to redeem all of the Issuers outstanding 5.625% Senior
Notes due 2021 (the 2021 Notes), of which $1,500million aggregate
principal amount was outstanding as of December31, 2016, and to
pay the related redemption premium and all fees and expenses
related thereto, and any remaining proceeds will be used for
general corporate purposes.
Ranking; Guarantees
The Notes are the Issuers senior unsecured obligations, ranking
equally in right of payment with all of their existing and future
senior indebtedness and senior in right of payment to all of
their existing and future subordinated indebtedness.
The Notes will be guaranteed, on a senior unsecured basis, by
(i)Hilton Worldwide Parent LLC (Parent), the Issuers immediate
parent company, (ii)the Company, the immediate parent company of
Parent, and (iii)each of the Issuers existing and future wholly
owned subsidiaries (other than the Co-Issuer) to the extent such
entities guarantee indebtedness under Issuers senior secured
credit facilities or certain other indebtedness of the Issuer,
the Co-Issuer or any subsidiary guarantor.
Optional Redemption
2025 Notes. The Issuers may, at their option, redeem the
2025 Notes, in whole or in part, at any time prior to April1,
2020, at a price equal to 50% of the principal amount of the 2025
Notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the redemption date, plus the applicable make-whole
premium. In addition, beginning on April1, 2020, the Issuers may
redeem all or a part of the 2025 Notes at a redemption price
equal to 102.312% of the principal amount redeemed, plus accrued
and unpaid interest to, but excluding, the redemption date. The
redemption price decreases to 101.156% and 100.000% of the
principal amount redeemed on April1, 2021 and April1, 2022,
respectively. In addition, at any time prior to April1, 2020, the
Issuers may, at their option, redeem up to 40% of the aggregate
principal amount of the 2025 Notes issued under the Indenture
with the proceeds of certain equity offerings at a redemption
price of 104.625% of the principal amount thereof, plus accrued
and unpaid interest.
2027 Notes. The Issuers may, at their option, redeem the
2027 Notes, in whole or in part, at any time prior to April1,
2022, at a price equal to 50% of the principal amount of the 2027
Notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the redemption date, plus the applicable make-whole
premium. In addition, beginning on April1, 2022, the Issuers may
redeem all or a part of the 2027 Notes at a redemption price
equal to 102.437% of the principal amount redeemed, plus accrued
and unpaid interest to, but excluding, the redemption date. The
redemption price decreases to 101.218%, 100.609% and 100.000% of
the principal amount redeemed on April1 2023, April1, 2024 and
April1, 2025, respectively. In addition, at any time prior to
April1, 2020, the Issuers may, at their option, redeem up to 40%
of the aggregate principal amount of the 2027 Notes issued under
the Indenture with the proceeds of certain equity offerings at a
redemption price of 104.875% of the principal amount thereof,
plus accrued and unpaid interest.
Repurchase at the Option of Holders
Upon the occurrence of a change of control triggering event or
upon the sale of certain assets in which Issuer and its
restricted subsidiaries do not apply the proceeds as required,
the holders of the Notes will have the right to require the
Issuers to make an offer to repurchase each holders Notes at a
price equal to 101% (in the case of a change of control
triggering event) or 50% (in the case of an asset sale) of their
principal amount, plus accrued and unpaid interest.
Covenants; Events of Default
The Indenture contains covenants that, among other things, limit
the ability of the Issuer and its restricted subsidiaries to
incur additional indebtedness or issue certain preferred shares,
pay dividends, redeem stock or make other distributions, make
certain investments, sell or transfer certain assets, create
liens, consolidate, merge, sell or otherwise dispose of all or
substantially all of the Issuers assets, enter into certain
transactions with affiliates, and designate subsidiaries as
unrestricted subsidiaries. These covenants are subject to a
number of important exceptions and qualifications. Neither Parent
nor the Company is subject to the restrictive covenants of the
Indenture. The Notes also contain customary events of default,
the occurrence of which could result in the principal of and
accrued interest on the Notes to become or be declared due and
payable.
Registration Rights Agreement
On March16, 2017, the Issuers, the Company and other guarantors
of the Notes, and Goldman, Sachs Co., on behalf of the several
initial purchasers of the Notes (the Initial Purchasers), entered
into a Registration Rights Agreement with respect to the Notes
(the Registration Rights Agreement). In the Registration Rights
Agreement, the Issuers and the guarantors have agreed that they
will use their respective commercially reasonable efforts to
(i)file a registration statement on an appropriate registration
form with respect to a registered offer to exchange the Notes for
new notes, with terms substantially identical in all material
respects to the Notes and (ii)cause the exchange offer
registration statement to be declared effective under the
Securities Act.
The Issuers and the guarantors have agreed to use their
commercially reasonable efforts to cause the exchange offer to be
consummated or, if required, to have one or more shelf
registration statements declared effective, within 450 days after
the issue date of the Notes. If the Issuers and the guarantors
fail to satisfy this obligation (a registration default), the
annual interest rate on each series of Notes will increase by
0.25% for the first 90-day period immediately following the
occurrence of the registration default. The annual interest rate
on each series of Notes will increase by an additional 0.25% for
each subsequent 90-day period during which the registration
default continues, up to a maximum additional interest rate of
1.0% per annum. If the registration default is corrected, the
interest rate on each series of Notes will revert to the original
level.
If the Issuers must pay additional interest, they will pay
holders of the Notes in cash on the same dates that the Issuers
make other interest payments on the Notes, until the registration
default is corrected.
Credit Agreement Amendment
On March16, 2017, the Issuer entered into Amendment No.3 (the
Amendment) to the Credit Agreement dated as of October25, 2013
(as amended by that certain Amendment No.1 to the Credit
Agreement dated as of August18, 2016 and as further amended by
that certain Amendment No.2 to the Credit Agreement dated as of
November21, 2016, the Credit Agreement). After giving effect to
the Amendment, the aggregate principal amount of term B-2 loans
outstanding under the Credit Agreement will equal $3,958.9million
(the Repriced Term Loans), including incremental term B-2 loans
incurred to the Amendment to refinance all of the term B-1 loans
outstanding immediately prior to giving effect to the Amendment.
The Repriced Term Loans provide for substantially the same terms
as the outstanding term B-2 loans, which mature on October25,
2023, except that the Repriced Term Loans (i)provide for a
reduced applicable margin on LIBOR rate loans of 2.00% and a
reduced applicable margin on base rate loans of 1.00% and a LIBOR
floor of 0.00%; (ii) provide for a premium of 1.00% of the
aggregate principal amount of any Repriced Term Loans prepaid as
a result of certain repricing transactions occurring within six
months of the effective date of the Amendment; and (iii)are
subject to periodic amortization payments to be made on the last
business day of each quarter in installments in an aggregate
principal amount equal to 0.25% of the original principal amount
of the Repriced Term Loans (which amounts shall be reduced given
the application of prepayments on the Repriced Term Loans in
order of priority required to the Repriced Term Loans), with the
remaining amount payable on the applicable maturity date with
respect to such Repriced Term Loans.
Certain of the Initial Purchasers and participants in the Credit
Agreement and their respective affiliates have engaged in, and
may in the future engage in, investment banking, advisory roles
and other commercial dealings in the ordinary course of
business with the Company or its affiliates. They have received,
or may in the future receive, customary fees and commissions for
these transactions. In addition, certain of the Initial
Purchasers or their respective affiliates may receive a portion
of the net proceeds from the offering of the Notes that was used
to redeem the Companys 2021 Notes. Blackstone Advisory Partners
L.P., one of the Initial Purchasers, is also an affiliate of The
Blackstone Group L.P. (Blackstone). Blackstone and its affiliates
own approximately 15% of the Companys outstanding common stock.
Affiliates of certain other Initial Purchasers are also
stockholders of the Company.
Each of the foregoing descriptions of the Indenture, the Notes,
the Registration Rights Agreement and the Amendment does not
purport to be complete and is qualified in its entirety by
reference to the full text of each of such documents, which are
filed as Exhibits 4.1, 4.2, 4.3 and 10.1, respectively, to this
Current Report on Form 8-K and are incorporated herein by
reference.
| Item1.02. |
Termination of Material Definitive Agreement. |
On March22, 2017, the Issuers completed the redemption in full of
all of the $1,500million aggregate principal amount of issued and
outstanding 2021 Notes at a redemption price of 102.813% of the
outstanding aggregate principal amount, plus accrued and unpaid
interest to, but excluding, the redemption date. As a result, the
indenture, dated as of October4, 2013 (as amended and
supplemented from time to time, the 2021 Notes Indenture), by and
among the Issuers, the Company and other guarantors party
thereto, and Wilmington Trust, National Association, as trustee,
was satisfied and discharged and the Issuers and guarantors have
no further obligations under the 2021 Notes, the related
guarantees or the 2021 Notes Indenture.
| Item2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information contained in Item 1.01 concerning the Issuers
direct financial obligations under the Notes is incorporated by
reference in this Item 2.03.
| Item7.01. | Regulation FD Disclosure. |
As an update to a previous announcement, at this time the Company
has elected to retain its existing corporate entity name of
Hilton Worldwide Holdings Inc.
The information in this Current Report on Form 8-K furnished to
Item 7.01 of Form 8-K shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended
(the Exchange Act), or otherwise subject to the liabilities of
that section, nor shall it be deemed incorporated by reference
into any filing made by the Company under the Securities Act of
1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such a filing. The
furnishing of such information in this Current Report on Form 8-K
to Item 7.01 of Form 8-K will not be deemed an admission as to
its materiality.
| Item9.01 | Financial Statements and Exhibits |
(d) Exhibits.
|
Exhibit No. |
Description |
|
| 4.1 |
Indenture, dated as of March16, 2017, by and among Hilton Worldwide Finance LLC, Hilton Worldwide Finance Corp., the guarantors from time to time party thereto and Wilmington Trust, National Association, as trustee. |
|
| 4.2 |
Form of 4.625% Senior Note due 2025 (included in Exhibit 4.1). |
|
| 4.3 |
Form of 4.875% Senior Note due 2027 (included in Exhibit 4.1). |
|
| 4.4 |
Registration Rights Agreement, dated as of March16, 2017, by and among Hilton Worldwide Finance LLC, Hilton Worldwide Finance Corp., the guarantors party thereto and Goldman, Sachs Co., on behalf of the initial purchasers. |
|
| 10.1 |
Amendment No.3, dated as of March16, 2017, to the Credit Agreement, dated as of October25, 2013 (as amended by that certain Amendment No.1 to the Credit Agreement dated as of August18, 2016 and as further amended by that certain Amendment No.2 to the Credit Agreement dated as of November21, 2016), by and among Hilton Worldwide Holdings Inc., Hilton Worldwide Parent LLC, Hilton Worldwide Finance LLC, the other guarantors party thereto from time to time, Deutsche Bank AG New York Branch as administrative agent, collateral agent, swing line lender and L/C issuer and the other lenders party thereto from time to time. |
About Hilton Worldwide Holdings Inc. (NYSE:HLT)
Hilton Worldwide Holdings Inc. is a hospitality company. The Company is engaged in owning, leasing, managing, developing and franchising hotels, resorts and timeshare properties. The Company operates through three segments: ownership, management and franchise, and timeshare. The Company’s ownership segment consisted of 146 hotels with 59,463 rooms at December 31, 2015. Through management and franchise segment, the Company had 4,419 hotels with 691,887 rooms at December 31, 2015. As of December 31, 2015, through the timeshare segment, the Company had 45 properties comprising 7,152 units. It markets and sells timeshare intervals; operates timeshare resorts and a timeshare membership club, and provides consumer financing. Its brand portfolio includes its luxury and lifestyle hotel brands, such as Waldorf Astoria Hotels & Resorts, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton and Tru by Hilton. Hilton Worldwide Holdings Inc. (NYSE:HLT) Recent Trading Information
Hilton Worldwide Holdings Inc. (NYSE:HLT) closed its last trading session up +1.01 at 57.70 with 1,514,628 shares trading hands.