(Bloomberg)—Park Hotels & Resorts Inc. has held discussions with lenders including Bank of America Corp. about a potential $500 million high-yield bond offering, according to a person with knowledge of the matter.
The Tysons, Virginia-based real estate investment trust, which was spun out of Hilton Worldwide Holdings Inc., has sought credit ratings ahead of what would be an inaugural junk bond, said the person, who requested anonymity because the talks are private. The company could launch a transaction as soon as this week, the person added.
Spokesmen for Park Hotels and Bank of America declined to comment.
Companies including cruise line operators, airlines and hotel chains have sold bonds in recent weeks to shore up liquidity as a global pandemic keeps travelers at home. Park Hotels, like many of its rivals, has seen the value of its shares plummet. Its stock has tumbled more than 65% year-to-date, giving it a market value of about $1.9 billion.
In delivering first-quarter earnings earlier Monday, the company said it had suspended operations at 38 of its 60 hotels due to Covid-19, and had reduced the capacity at its remaining hotels to 15%. Its portfolio includes the Hilton Hawaiian Village Waikiki Beach Resort, the Hilton San Francisco Union Square and the New York Hilton Midtown.
Park Hotels has fully drawn on its $1 billion revolving credit facility as a precautionary measure, and extended its maturity to December 2021, receiving covenant waivers from lenders in the process, it said.
The company has $1.2 billion in current liquidity and a cash burn rate of $70 million per month in an extreme situation with all operations suspended. That leaves it well positioned to navigate the virus disruption, Thomas J. Baltimore Jr., the company’s chief executive officer said in a statement.
--With assistance from Patrick Clark.
To contact the reporter on this story: Gillian Tan in New York at [email protected].
To contact the editors responsible for this story: Alan Goldstein at [email protected]
© 2020 Bloomberg L.P.