Hilton Grand Vacations gets $200 million loan, $200 million revolver

By Angela McDaniels

Tacoma, Wash., Jan. 4 – Hilton Grand Vacations Inc. indirect subsidiary Hilton Grand Vacations Borrower LLC entered into a $200 million senior secured term loan and a $200 million senior secured revolving credit facility on Dec. 28, according to an 8-K filing with the Securities and Exchange Commission.

Both mature on Dec. 28, 2021.

The initial interest rate is Libor is 225 basis points subject to a Libor floor of zero. The margin over Libor ranges from 200 bps to 275 bps.

The revolver’s initial commitment fee is 35 bps.

Hilton Grand Vacations drew down the entire $200 million of the term loans, the proceeds of which will be used to finance its spinoff from Hilton Worldwide Holdings Inc. If transaction expenses exceed $200 million, the company may draw additional amounts under the revolver after the spinoff.

Deutsche Bank Securities Inc., Bank of America Merrill Lynch, Barclays Bank plc, Goldman Sachs Bank USA, J.P. Morgan Securities LLC, SunTrust Bank and Wells Fargo Securities LLC are the bookrunners. Deutsche Bank AG, New York Branch is the administrative agent. Bank of America, NA and Goldman Sachs Bank USA are the syndication agents.

The revolver has a $30 million sublimit for letters of credit and a $10 million sublimit for swingline borrowings.

The credit agreement has an accordion feature for up to $300 million plus an unlimited amount subject to pro forma compliance with a first-lien net leverage ratio not to exceed 0.25 to 1.00.

The company must prepay the term loan with 100% of the net cash proceeds of certain asset sales and 100% of the net proceeds of any incurrence of debt by the borrower or any of its restricted subsidiaries, other than debt permitted to be incurred or issued under the credit agreement. Each lender has the right to reject its pro rata share of mandatory prepayments.

The term loan requires quarterly amortization payments of 1.25%.

The borrower and its restricted subsidiaries are required to maintain a maximum first-lien net leverage ratio not to exceed 2 to 1 and a minimum interest coverage ratio of not less than 2 to 1.

Hilton Grand Vacations is a timeshare vacation company based in Orlando, Fla.

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