Extended Stay America, ESH Hospitality extend revolvers, amend pricing

By Angela McDaniels

Tacoma, Wash., Sept. 20 – Extended Stay America, Inc. and ESH Hospitality, Inc. amended their revolving credit facilities on Wednesday to extend them to Sept. 18, 2024 from Aug. 30, 2021, according to an 8-K filing with the Securities and Exchange Commission.

The amendment also decreased the interest rate on Extended Stay America’s $50 million revolver to Libor from 225 basis points from Libor plus 300 bps, and the fee on the unutilized revolver balance was decreased to 30 bps or 17.5 bps based on the amount outstanding under the facility from 35 bps or 17.5 bps.

The amendment had the following impact on ESH Hospitality’s $350 million revolver:

• Decreased the interest rate spread on revolving loans based on Libor to 150 bps from 225 bps for any period during which the consolidated total net leverage ratio is less than or equal to 3 to 1, to 175 bps from 250 bps for any period during which the ratio is greater than 3 to 1 and less than or equal to 3.5 to 1.0 and to 200 bps from 275 bps for any period during which the ratio is greater than 3.5 to 1.0;

• Decreased the fee on the unutilized revolver balance to 17.5 bps or 30 bps based on the amount outstanding under the facility from 17.5 bps or 35 bps; and

• Increased the trigger for the springing financial covenant from the aggregate principal amount of borrowings and letters of credit exceeding 25% of the aggregate principal amount of the revolver to the aggregate principal amount of borrowings and letters of credit exceeding 35% of the new revolver.

Deutsche Bank AG, New York Branch is the administrative agent for both credit agreements.

As previously reported, Extended Stay America entered into a new $630.9 million seven-year covenant-lite term loan B (Ba2/BB+).

The original issue discount was 99.75, tightened from 99.5. Pricing was Libor plus 200 bps with a 0% Libor floor. The term loan has 101 soft call protection for six months.

Deutsche Bank Securities Inc. was the left bookrunner on the deal.

Proceeds were used to amend and extend $630.9 million of the company’s existing term loan B due 2023. The remaining $500 million term loan B balance was repaid with proceeds from $750 million of new 4 5/8% senior notes due 2027 (Ba3/BB-).

Extended Stay America is a Charlotte, N.C.-based operator of an extended-stay hotel chain. ESH Hospitality is its real estate investment trust subsidiary.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.