Hilton Hotels receives consents to amend most notes, amends tender for Chilean notes, 8% bonds

New York, Sept. 25 - Hilton Hotels Corp. announced it received the necessary consents to amend its $400 million of 7 5/8% notes due May 15, 2008, $200 million of 7.2% notes due Dec. 15, 2009, $300 million of 8¼% notes due Feb. 15, 2011, $375 million of 7 5/8% notes due Dec. 1, 2012 and $200 million of 7½% notes due Dec. 15, 2017.

The company also said that following discussions with investors it has amended the amount on offer for its 61.72 billion Chilean pesos of 7.43% Chilean inflation-indexed notes due 2009 and extended the tender for those notes and its $200 million of 8% quarterly interest bonds due 2031.

Hilton said that for securities for which it has received consents it expects to execute a supplemental indenture incorporating the changes promptly. They will go into effect when the company buys the bonds.

For the Chilean notes, the payment on offer will now be 65,560.95 pesos per 50,000 pesos original principal amount, converted into U.S. dollars at the exchange rate defined in the officers' certificate for the notes at 5 p.m. Santiago time on Oct. 9. The total includes a consent payment of 2,000 pesos per 50,000 pesos.

The original amount on offer for each 50,000 Chilean pesos original principal amount was $119.53, which represents a price of $1,028.72 per $1,000 adjusted principal amount converted at the observed exchange rate on Sept. 11.

With the changes, for the peso notes and the 8% bonds, the consent deadline is extended to 5 p.m. ET on Oct. 1.

Hilton announced the tender on Sept. 12 and the Beverly Hills, Calif., hospitality company said it was also soliciting consents to amend the note indentures to eliminate substantially all of the restrictive covenants, to eliminate certain events of default, to modify or eliminate covenants regarding consolidations, mergers and sale of assets and company reports and to modify or eliminate certain other provisions, including, without limitation, certain provisions relating to defeasance.

The offer is linked to the previously announced merger agreement providing for the acquisition of Hilton by BH Hotels LLC, which is controlled by investment funds affiliated with the Blackstone Group LP.

The consent deadline was set at 5 p.m. ET on Sept. 25. The offer ends at 8 a.m. ET on Oct. 11, a deadline that is unchanged.

For each $1,000 principal amount, Hilton will determine its payout using the a fixed spread of 50 basis points and the 3¾% Treasury due May 15, 2008 for the 7 5/8% notes, the 3½% Treasury due Dec. 15, 2009 for the 7.2% notes, the 5% Treasury due Feb. 15, 2011 for the 8¼% notes, the 4% Treasury due Nov. 15, 2012 for the 7 5/8% notes and the 8 7/8% Treasury due Aug. 15, 2017 for the 7½% notes.

Pricing will be set at 11 a.m. ET on Oct. 5.

For each $25.00 principal amount of 8% bonds, the company will pay $25.125.

The payouts include consent payments of $1.00 per 8% bond, $3.00 per 7.43% note and $30.00 per $1,000 principal amount of the other notes.

Holders will also receive accrued interest up to the payment date.

Bear, Stearns & Co. Inc. (877 696-BEAR or call collect 212 272-5112) and UBS Investment Bank (888 719-4210 or call collect 203 719-4210) are the dealer managers.

Banc of America Securities LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley & Co. Inc. are also acting as dealer managers and solicitation agents.

Global Bondholder Services Corp. (866 924-2200 or call collect 212 430-3774) is the information agent.

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