Fitch puts Hilton on negative watch

30th Dec 2005

Fitch Ratings has placed the ratings of Hilton Hotels Corp. on Negative Watch after announcing plans to acquire the lodging assets of Hilton Group plc. for $5.71 billion.The ratings affected are the ‘BBB-’ senior unsecured credit facility, the ‘BBB-’ senior unsecured notes, and the commercial paper rating of ‘B’.

The transaction and related costs will be funded with $1.2 billion of cash on hand, a new $5.5 billion credit facility, and $130 million of assumed debt. Hilton’s resulting credit profile will be much weaker, with estimated 2005 adjusted debt to EBITDA in excess of 5.0 times (x) and EBITDA to interest well below 4.0x.

Upon completion of the transaction, Hilton’s portfolio will consist of approximately 2,750 properties and 472,000 rooms.

Nearly 43% of Hilton’s pro forma $1.5 billion EBITDA will be derived from owned properties, 33% from managed and franchised properties, 16% from leased properties, and 8% from timeshare properties.

The transaction is expected to close in the first quarter of 2006, at which time Fitch plans to resolve the Negative Watch.


Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, ’ ‘. Published ratings, criteria, and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance, and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.


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