Blackstone cuts deal to restructure Hilton Hotels debt

22 Feb 2010

The world's biggest private equity firm Blackstone Group has cut a deal with lenders to restructure its Hilton hotels chain debt as it looks to revitalise its prize investment after the global economic crisis took a toll on leisure and business travel.

New York-based Blackstone with over $100 billion in assets under management has reached a deal, where Hilton's lenders would cut about $4 billion of the hotel chain's debt of $20 billion.

According to media reports, Blackstone's funds will contribute $800 million in capital to buy back Hilton's debt at a discount, as well as push back some of the maturities of Hilton's debt.

The restructuring will help Hilton pay approximately $900 million in interest payment and also shore up its finances as it struggles to emerge from the worst seen by the hotel industry in the past 18 months.

Hilton Hotels, the crown jewel in Blackstone Group's investment portfolio, was acquired by the equity firm in July 2007 for about $26-billion in cash. (See: Blackstone acquires Hilton Hotels for $26 billion)

Blackstone's funds and co-investors had invested about $5.6 billion through equity and it had borrowed $20 billion from a consortium of seven banks to fund the acquisition.