Hyatt Hotels Corporation (NYSE:H) has announced the issuance of $600 million in senior notes, according to a recent 8-K filing with the Securities and Exchange Commission. The company issued $150 million of its 5.250% Senior Notes due 2029 and $450 million of its 5.375% Senior Notes due 2031 on Wednesday.
The Chicago-based hospitality company stated that the net proceeds from the offering, which total approximately $594.6 million after underwriting discounts and offering expenses, will be used to repay its 5.375% senior notes due in 2025, before or on their maturity date of April 23, 2025. Remaining funds are earmarked for general corporate purposes and to cover fees and expenses associated with the offering.
Hyatt's decision to issue further notes follows an earlier issuance of $450 million aggregate principal amount on June 17, 2024. The notes were sold under an effective Registration Statement on Form S-3 and are governed by an indenture agreement with Computershare Trust Company, N.A., as trustee.
The 2029 Notes carry an interest rate of 5.250% per annum with semi-annual payments and are set to mature on June 30, 2029. The 2031 Notes have an interest rate of 5.375% per annum, with semi-annual payments commencing on June 15, 2025, and will mature on December 15, 2031.
Hyatt has the option to redeem the notes before their respective maturity dates at a price equal to 100% of the principal amount plus accrued interest and a "make-whole" premium. Additionally, in the case of a change of control triggering event, note holders may require the company to repurchase their notes at a price of 101% of the principal plus accrued interest.
The notes rank equally with all of Hyatt’s other unsecured unsubordinated debt, are senior to any future subordinated debt, and are structurally subordinated to the liabilities of Hyatt’s subsidiaries.
The underwriting agreement for the notes was made with Wells Fargo (NYSE:WFC) Securities, LLC, Goldman Sachs (NYSE:GS) & Co. LLC, and Truist Securities, Inc. as the representatives of the underwriters.
This financial move reflects Hyatt's strategic approach to managing its capital structure and addressing its forthcoming debt obligations.
The information provided is based on a press release statement filed with the SEC.
In other recent news, Hyatt Hotels Corporation revealed potential changes in stock ownership, with Pritzker family stockholders considering the sale of up to 15,360,573 restricted shares in the public market. This development was disclosed in a recent SEC filing. Additionally, Hyatt reported a system-wide RevPAR increase of 3% and a 10% expansion in its hotel pipeline, despite challenges from natural disasters impacting leisure travel.
Furthermore, Hyatt's World of Hyatt membership saw a significant increase, reaching a record 51 million, a 22% increase from the previous year. The company completed significant asset sales, including the Hyatt Regency Orlando for $1.07 billion, and anticipates full-year system-wide RevPAR growth of 3% to 4% and net rooms growth of 7.75% to 8.25%.
Despite a subpar earnings report, Baird, a financial services firm, revised its price target for Hyatt slightly upwards to $158.00 from $157.00, while maintaining a neutral stance on the stock. The firm cited factors such as brand acquisitions, a significant asset sale, and a revised net unit growth outlook as influential in Hyatt's performance. These are among the recent developments in Hyatt's operational and financial performance.
InvestingPro Insights
Hyatt Hotels Corporation's recent issuance of $600 million in senior notes aligns with its strategic financial management, as reflected in several key metrics from InvestingPro. The company's market capitalization stands at $14.83 billion, indicating its significant presence in the hospitality industry.
An InvestingPro Tip highlights that Hyatt "operates with a moderate level of debt," which is consistent with the company's approach to refinancing its existing debt through this new note issuance. This strategy may help Hyatt maintain financial flexibility while addressing upcoming maturities.
Another relevant InvestingPro Tip notes that Hyatt has "impressive gross profit margins." Indeed, the data shows a gross profit margin of 68.97% for the last twelve months as of Q3 2024, suggesting strong operational efficiency. This robust profitability could provide confidence to investors and creditors regarding Hyatt's ability to service its debt obligations.
The company's P/E ratio of 11.31 and adjusted P/E ratio of 12.62 for the last twelve months indicate that the market values Hyatt's earnings at a relatively moderate level, which could be attractive to value-oriented investors.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for Hyatt Hotels Corporation, providing a deeper understanding of the company's financial position and market performance.
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