Blackstone Denies Talks of Hilton Hotels Break Up
Abi BrayThe private equity group Blackstone, on August 11, denied the reports that it is planning to break up Hilton Hotel Corporation as part of its debt restructuring plan. A spokesperson for Blackstone went on to simply tell some sources that the rumors were just not true.
Despite the fact that Blackstone did kill rumors that it was planning on breaking up Hilton, it did confirm that it was exploring options to restructure $20.6 billion of debt that it had incurred when buying Hilton Hotel Corporation back in 2007.
Blackstone had purchased Hilton Hotels for $26 billion. A deal was financed with $20.6 billion of debt and $5.7 billion of equity. Blackstone went on to say that the public listing of some parts of Hilton was just one of the many options that was currently being explored – nothing more, nothing less.
Some other ways that Blackstone may want to restructure Hilton Hotel Cooperation’s capital structure and lessen its debt may even include a debt for equity swap. It is, however, understood that Blackstone must meet its debt repayment deadlines in four years of time. This explains why Blackstone is looking into possible options right now.
It is also thought that Blackstone wrote down its investment in Hilton Hotels as much as 50 percent since acquiring the group when markets were at its peak. The global economic downturn has really taken its toll on the demand for hotel rooms. The writing down of the investment is said to have cost an estimated $1.45 billion to Blackstone. This is a big loss in a time when the hotel industry has been under major heat anyway.
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