Wyndham Worldwide has announced a $1.6bn senior secured term loan facility by its spin-off subsidiary Wyndham Hotels & Resorts.
Additionally, Wyndham Hotels & Resorts has issued an aggregate principal amount of $500m senior unsecured notes due 2026 in a private offering.
Wyndham plans to use the proceeds from the term loan facility and the notes to finance its acquisition of La Quinta Holdings’s hotel franchising and management businesses, which was announced in January this year.
Under the terms of the agreement, Wyndham Worldwide will acquire La Quinta’s businesses for $1.95bn. The acquisition is expected to close in the second quarter of this year.
Wyndham Hotels has also arranged for a senior secured revolving credit facility of $750m, under which no borrowings are expected to be outstanding upon the spin-off or the La Quinta acquisition.
Set to mature in 2025, the facility will bear interest at a rate of LIBOR plus 175 basis points.
Wyndham Worldwide executive vice-president and chief financial officer David Wyshner said: “We are pleased to have put in place these senior notes and have arranged these credit facilities, which will provide the permanent financing for our pending acquisition of La Quinta’s hotel franchising and management businesses and will also comprise the non-equity, go-forward capital structure of Wyndham Hotels.
“This is a major milestone in our plan to spin-off the hotel business and further ensures Wyndham Hotels is well positioned to benefit from its significant scale, industry-leading position, strong cash flows, and rich portfolio of renowned brands.”
The senior notes will bear interest at a rate of 5.375% and the term loan facility is expected to close in conjunction with the completion of the La Quinta acquisition.