Hilton Completes Bond Sale Of $200 Million

Hilton Hotels Corp. (NYSE:HLT) today announced it has completed the issuance of $200 million of bonds.

The company issued $200 million of 30-year Quarterly Interest Bonds (Senior Unsecured Notes). The notes—rated Baa3, BBB- and BBB- by Moody`s, S&P and Fitch, respectively—carry a coupon of 8 percent and have a maturity date of Aug. 15, 2031.


The successful transaction, which was significantly oversubscribed, represented the company`s first-ever bond issuance in the retail market. Morgan Stanley was the sole book running manager, with A.G. Edwards & Sons Inc., Merrill Lynch & Co., Salomon Smith Barney and UBS Warburg serving as co-managers.


Proceeds from the transaction were used to retire all outstandings under Hilton`s original 1996 $1.75 billion revolver amended and extended until Oct. 18, 2003. The commitment under this facility has been extinguished with the closing of the bond transaction.


Hilton`s existing revolving credit facilities now consist of a $1.4 billion revolver maturing Nov. 30, 2004, and a $200 million, 364-day revolver expiring Nov. 28, 2001. Balances as of June 30, 2001, were $1.1 billion and $0, respectively, including commercial paper. Both facilities are agented by Bank of America, The Bank of Nova Scotia, First Union and Wachovia.

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Hilton also guarantees a $425 million credit facility, agented by The Bank of New York, for the Hilton Hawaiian Village. This facility, scheduled to expire June 30, 2003, had a balance (at June 30, 2001) of $420 million.


Upon the completion of the bond transaction, Hilton`s current total debt of $4.97 billion (net of $625 million of debt allocated to Park Place Entertainment) has a weighted average cost of 6.88 percent, and an average term of seven years. In keeping with the company`s stated goal of reducing its percentage of floating rate debt, Hilton`s current fixed-to-floating rate debt ratio currently stands at 68 percent to 32 percent…ahead of the company`s target of 65/35.


“As we`ve worked this year to reduce our debt levels and achieve our goal of lowering the percentage of floating rate debt, we are pleased to have successfully completed a transaction that represented a new investor base for Hilton,” said Mariel C. Albrecht, senior vice president and treasurer for Hilton Hotels Corp. “This issue was received enthusiastically by the marketplace, and when combined with the $700 million of bond issuances we completed earlier this year, has enabled us to successfully achieve our goals.”


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