Park Hotels & Resorts Inc. ("Park" or the "Company") (NYSE: PK) announced today that certain of its subsidiaries, Park Intermediate Holdings LLC (the "Operating Company"), PK Domestic Property LLC ("PK Domestic LLC") and PK Finance Co-Issuer Inc. (together with the Operating Company and PK Domestic LLC, the "Issuers"), completed the previously announced offering of $725 million aggregate principal amount of 5.875% senior secured notes due 2028 (the "Notes"). The Notes will pay interest semi-annually in arrears, at a rate of 5.875% per year, and will mature on October 1, 2028. The Notes are guaranteed by Park and certain subsidiaries of the Operating Company that guarantee the Company’s senior credit facilities and existing senior secured notes due 2025. The Notes are secured, subject to permitted liens, by a first priority security interest in all of the capital stock of certain wholly owned subsidiaries of certain of the guarantors and PK Domestic LLC, which collateral also secures the obligations under the Company’s senior credit facilities and existing senior secured notes due 2025 on a first priority basis.
The Issuers used $631 million of the net proceeds of the offering to fully repay the Company’s existing term loan maturing in December 2021 and used the remaining net proceeds to repay $80 million outstanding under the Company’s revolving credit facility (the "Revolver").
Upon closing of the offering, the Company’s previously announced amendments to its Revolver and $670 million term loan maturing in August 2024 became effective (the "Credit Amendments"). Among other things, the Credit Amendments increase the commitments under the Revolver by $75 million to $1.075 billion, extend the waiver period for the testing of the financial covenants under the credit facilities from the date the financial statements are delivered for the quarter ending June 30, 2021 to the date the financial statements are delivered for the quarter ending March 31, 2022, and extend the maturity of the Revolver from December 2021 to December 2023 with respect to 90.1% of the Revolver commitments. Giving effect to the Notes offering and Credit Amendments, the Company’s total liquidity as of July 31, 2020 would have been $1.7 billion, inclusive of approximately $475 million available for borrowing under its Revolver.
"I am extremely pleased with the execution of our simultaneous Revolver extension, credit facility amendments and successful bond offering," said Thomas J. Baltimore, Jr., Chairman and CEO of Park. "These concurrent transactions were purposefully designed to further extend our debt maturity profile, provide for incremental liquidity and obtain additional financial covenant relief which will allow us the flexibility to execute our business plan in an environment that continues to be challenging. Moreover, the high participation rate for the Revolver extension, and successful upsizing and pricing of our notes, demonstrates the support for our team’s proactive management during this crisis, our high-quality portfolio, and our ability to diversify our capital sources."
The Notes and the related guarantees were not registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. The Notes were not offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes were offered only to persons reasonably believed to be "qualified institutional buyers" in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements related to Park’s current expectations regarding the performance of its business, financial results, liquidity and capital resources, the effects of competition and the effects of future legislation or regulations, the expected completion of anticipated dispositions, the declaration and payment of future dividends, and other non-historical statements. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and which could materially affect its results of operations, financial condition, cash flows, performance or future achievements or events. Currently, one of the most significant factors is the potential adverse effect of COVID-19, including possible resurgences, on the Company’s financial condition, results of operations, cash flows and performance, its hotel management companies and its hotels’ tenants, and the global economy and financial markets. The extent to which COVID-19 impacts the Company, its hotel managers, tenants and guests at the Company’s hotels will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its effect, additional closures that may be mandated or advisable even after the reopening of certain of the Company’s hotels on a limited basis, whether due to an increased number of COVID-19 cases or otherwise, and the direct and indirect economic effects of the pandemic and containment measures, among others.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements and Park urges investors to carefully review the disclosures Park makes concerning risk and uncertainties in Item 1A: "Risk Factors" in Park’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and Annual Report on Form 10-K for the year ended December 31, 2019, as such factors may be updated from time to time in Park’s filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Except as required by law, Park undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
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Senior Vice President, Corporate Strategy