Interstate Closes on $125mil Senior Secured Credit Facility
MARCH 12, 2007. Interstate Hotels & Resorts (NYSE: IHR), one of the nation's largest independent hotel management companies, today announced that it closed on a new, $125 million senior secured credit facility, which matures on March 9, 2010. The new facility consists of a $65 million term loan and a $60 million revolver, both bearing an interest rate of LIBOR plus 275 basis points.
Lehman Brothers Inc. was the sole lead arranger and sole bookrunner for the new facility, while Soci'et'e G'en'erale was the syndication agent and Calyon New York Branch and Merrill Lynch Capital were the co-documentation agents.
"We lowered our interest rate by 175 basis points on the term loan and 50 basis points on the revolving loan," said Bruce Riggins, chief financial officer. "In addition, our required principal payments have been substantially reduced from $5 million per year to approximately $650,000 per year, providing more than $5 million of additional operating cash flow per year."
Upon closing, the company immediately repaid $15.5 million outstanding under the existing credit facility. On April 1st, the company plans to repay its $19 million non-recourse mortgage loan associated with the Hilton Concord. After this transaction, the company will have total debt outstanding of $122.5 million, consisting of the new $65 million senior term loan and $57.5 of mortgage debt.
"This new credit facility not only provides us with a lower cost of borrowing, it gives us greater capacity and flexibility to continue our growth strategy to acquire ownership interests in hotel real estate," Riggins added. "We now have over $80 million of cash and borrowing capacity available to execute this strategy."
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