DiamondRock secures financial covenant waivers for credit agreements

By Sarah Lizee

Olympia, Wash., June 10 – DiamondRock Hospitality Co. finalized an amendment to the credit agreement for its $400 million revolver and $350 million unsecured term loan and the credit agreement for its $50 million unsecured term loan, waiving all financial covenants for one year, according to a press release.

The amendment provides for a waiver of the existing quarterly tested financial covenants beginning in the second quarter of 2020 through the first quarter of 2021. After the end of the covenant relief period, some quarterly tested financial covenants are modified to make compliance easier through the fourth quarter of 2021.

The amendment also provides for imposition of some restrictions during the covenant relief period, including restrictions on share repurchases and dividend and distribution payments in excess of 100% of taxable net income and new covenants limiting the incurrence of additional debt, asset sales and discretionary capital expenditures, in each case subject to various exceptions, and requiring some mandatory prepayments.

During the covenant relief period, acquisitions of encumbered hotels are permitted, subject to a $300 million limitation, and acquisitions of unencumbered hotels are permitted subject to a partial repayment of the outstanding balance on the revolver or funded with junior capital.

DiamondRock is a Bethesda, Md.-based real estate investment trust that owns hotel properties.

© 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.