Hilton Grand adds more banks to term and bridge loan commitments

By Sara Rosenberg

New York, April 15 – Hilton Grand Vacations Inc. amended its debt commitment letter to add Credit Suisse, JPMorgan Chase Bank, Goldman Sachs Bank USA and MUFG to the commitment parties list, joining BofA Securities, Deutsche Bank Securities Inc. and Barclays, according to a PREM14A filed with the Securities and Exchange Commission on Thursday.

As previously reported, the company has a commitment for a $1.3 billion seven-year senior secured term loan B and plans to issue $675 million of senior unsecured notes to help support its acquisition of Diamond Resorts International Inc.

Based on the commitment letter, pricing on the term loan is expected at Libor plus 250 basis points with a 0.5% Libor floor.

The term loan has 101 soft call protection for six months and amortization of 1% per annum.

Backing the notes is a commitment for a $675 million one-year senior unsecured bridge loan priced at Libor plus 450 bps, stepping up by 50 bps every three months until a specified cap is reached. The debt has a 0% Libor floor.

BofA is the administrative agent on the term loan B and Deutsche is the administrative agent on the bridge loan.

Proceeds will be used to refinance existing debt in connection with the acquisition, including senior notes at Hilton Grand Vacations and notes at Diamond Resorts.

Under the agreement, Diamond Resorts is being purchased from Apollo Global Management Inc. and Reverence Capital Partners for 34.5 million shares of Hilton Grand Vacations common stock. The transaction is valued at $1.4 billion.

Upon closing, existing Hilton Grand Vacations shareholders will own about 72% of the combined company and the Apollo Funds will own around 28% of the combined company.

Pro forma leverage will be 6.5x but is expected to return to below 3x within 24 months through significant cash flow generation.

Closing is targeted for the summer, subject to customary conditions, regulatory approvals and shareholder approval.

Hilton Grand Vacations is an Orlando, Fla.-based timeshare company. Diamond Resorts is a timeshare operator.

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