S&P puts Starwood Hotels on negative watch

Standard & Poor's said it placed its BB+ corporate credit rating for Starwood Hotels & Resorts Worldwide Inc. and other ratings on CreditWatch with negative implications.

S&P said the CreditWatch listing follows Starwood's recent announcement that along with Lehman Brothers Holdings Inc., it has acquired all of the outstanding senior debt (about $1.3 billion) of Le Meridien Hotels and Resorts Ltd. Starwood will fund $200 million of the purchase price for an approximate 16% share.

As part of this funding, Lehman and Starwood have an exclusive agreement to negotiate the recapitalization of Le Meridien in the coming months.

S&P said the CreditWatch listing does not relate to the initial $200 million investment by Starwood but rather considers the possibility that Starwood may ultimately acquire Le Meridien in an all cash deal, which would have a more meaningful impact on Starwood's credit measures. Negotiations, however, are in the early stages, and the valuation of Le Meridien and the structure of any transaction (if ultimately agreed upon) is not yet certain.

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