Front Desk

Hilton Rejoices Over Capital Restructuring

They're dancing in the hallways at Hilton Worldwide's headquarters in Beverly…err, McLean, VA today as executives and employees celebrate last night's announcement that the company and its parent, The Blackstone Group, restructured nearly all of Hilton's substantial debt load. The deal extends the maturity of the debt until November 2015 and reduces total debt by a whopping $4 billion. To make it happen, the company purchased $1.8 billion of its debt and converted $2.1 billion of junior mezzanine debt to preferred equity. Without knowing more particulars, it sounds as though someone, probably Blackstone, took a haircut on the deal.

Hilton has been under a lot of financial and legal pressure lately, and this deal will go far to loosen the vise and enable the company to hang on until the hotel market completely turns the corner back toward prosperity. Blackstone bought Hilton in mid-2007, at the top of the market, for $20 billion. Since the industry downturn, rumors have swirled that the company has been struggling to meet its debt obligations and that it might look to shed some brands. (If the latter is still the case, Hilton honcho Chris Nassetta should call Steve Joyce at Choice Hotels. Joyce has openly coveted Hilton's Doubletree brand, figuring it to be a good fit into Choice's currently brand lineup of mostly limited-service flags.)

Of course, Hilton still has one nagging problem looming: the lawsuit and federal investigation surrounding allegations that Hilton stole company secrets from Starwood to jump-start its now-abandoned attempt to enter the upscale lifestyle hotel business.

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