Choice Hotels seeks $200 million revolver, $150 million term loan

By Angela McDaniels

Tacoma, Wash., June 19 - Choice Hotels International, Inc. is in the process of negotiating and arranging a new senior secured credit facility, according to a 424B5 filing with the Securities and Exchange Commission.

The new credit facility is expected to consist of a $200 million revolving credit facility and a $150 million term loan with a four-year term and a one-year extension option. It is expected to be prepayable at any time without penalty.

The company plans to price $400 million of 10-year senior notes, and the new facility is expected to close within roughly 30 days of the closing of the note offering.

If Choice Hotels enters into the new credit facility, it expects to use a portion of its cash and cash equivalents to repay its existing $300 million senior unsecured revolving credit facility due Feb. 24, 2016 and to terminate the existing revolver.

As of March 31, the company had about $5.9 million outstanding under the existing revolver.

Proceeds of the new credit facility and notes will be used to pay a special cash dividend of about $600 million during 2012.

The company said affiliates of some of the note underwriters are expected to be arrangers, agents and/or lenders under the new credit facility. The underwriters are Deutsche Bank Securities Inc., Wells Fargo Securities, LLC, Bank of America Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities LLC.

Choice Hotels is a hotel franchisor based in Silver Spring, Md.

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