RLJ Lodging Trust amends credit agreements to allow FelCor merger

By Tali Rackner

Minneapolis, Sept. 1 – RLJ Lodging Trust entered into a first amendment to its second amended and restated credit agreement and a fifth amendment to its term loan agreement on Thursday with Wells Fargo Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Each of the amendments include substantially the same terms for the purpose of allowing the consummation of the merger between the company and FelCor Lodging LP.

Both amendments increase the maximum permitted leverage ratio to 7 times, which level was previously only allowed for periods of two consecutive quarters (after which the maximum would have been 6.5 times).

Under the amendments, if the leverage ratio exceeds 6.5 times as of the end of any two consecutive fiscal quarters, then the company, operating partnership RLJ Lodging Trust, LP and certain direct and indirect subsidiaries of the operating partnership will be required to pledge their equity interests in the operating partnership and certain other direct and indirect subsidiaries of the operating partnership to secure the obligations under the existing credit facility, the existing term loan agreement and certain other pari passu debt until the leverage ratio does not exceed 6.5 times for two consecutive quarters.

The amendments also include certain changes to financial covenants and subsidiary guaranty requirements that allow debt of FelCor under secured and unsecured indentures to remain outstanding following the companies’ merger.

In addition, the first amendment increases the revolving loan commitments under the existing credit facility to $600 million from $400 million and provides the operating partnership with the option to further increase revolving loan commitments to $750 million.

RLJ Lodging is a Bethesda, Md.-based real estate investment trust focused on acquiring hotels.

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