Moody's downgrades MeriStar

Moody's Investors Service said it lowered the senior unsecured ratings on MeriStar Hospitality Operating Partnership LP's notes to B3 from B2 and confirmed MeriStar Hospitality Corp.'s Caa1 senior subordinated debt rating followed MeriStar acquisition by affiliates of The Blackstone Group, an investment and advisory firm. The outlook is stable.

The agency said the lower ratings reflect significant use of secured debt and the considerably diminished claim of the unsecured debt holders in the new capital structure. In addition, unencumbered assets are practically non-existent. As a result of the tender and consent offer, most restrictive covenants pertaining to the notes have been removed (though the notes did not benefit from standard REIT covenants).

Furthermore, given that MeriStar has been acquired by and merged into entities controlled by the private entity, Blackstone, Moody's said it anticipates considerably less transparency with respect to the financial and operational aspects of the firm.

© 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.