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The Blackstone Group L.P. Message Board

  • carolyn_novice carolyn_novice Dec 15, 2013 7:01 PM Flag

    Fed’s Hilton Getaway Hospitality Sweet

    Fed’s Hilton Getaway Hospitality Sweet
    Source: Barron’s Google search will give you the same
    Review | SATURDAY, DECEMBER 14, 2013 The Fed's Hilton Getaway: Hospitality Sweet
    By MIKE VALLO and CHRISTOPHER C. WILLIAMS | MORE ARTICLES BY AUTHOR
    Blackstone reaps rewards from debt restructuring with Hilton IPO. One of the biggest bondholders in the restructuring was the New York Fed.
    One of the underappreciated skills of the private-equity crowd is negotiation. A prime example is the 2010 Hilton debt restructuring in which Blackstone Group bested a group of bondholders after months of talks. At the time, Blackstone was desperate to salvage its pricey 2007 leveraged buyout of the hotel chain. The restructuring allowed Hilton to shed $4 billion in debt to a manageable $16 billion. In exchange, Blackstone handed over a modest amount of Hilton equity.
    Blackstone reaped the rewards when it took Hilton Worldwide Holdings (ticker: HLT) public last week. Its investment funds are now sitting on about $10 billion of gains, with Hilton valued at $22 billion. Much of those gains could have gone to bondholders, who failed to use their leverage to extract a large Hilton equity stake in return for granting financial relief. Many participants in the debt restructuring sold equity in the Hilton initial public offering.
    Pro Bono: The Fed unloaded some debt at a loss to Blackstone and converted some into equity.
    One of the largest bondholders participating in the restructuring was the Federal Reserve Bank of New York. It owned $4 billion of Hilton debt through a vehicle called Maiden Lane, which had taken on $30 billion of troubled Bear Stearns' assets as a condition for JPMorgan's taking over that failing firm in 2007. Maiden Lane unloaded some debt at a loss to Blackstone in the restructuring, while converting part of its debt into equity. The Fed has since sold almost all of its Hilton debt and on Sept. 30 owned about $46 million of equity. It's not known whether it sold equity i

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    • One of the largest bondholders participating in the restructuring was the Federal Reserve Bank of New York. It owned $4 billion of Hilton debt through a vehicle called Maiden Lane, which had taken on $30 billion of troubled Bear Stearns' assets as a condition for JPMorgan's taking over that failing firm in 2007. Maiden Lane unloaded some debt at a loss to Blackstone in the restructuring, while converting part of its debt into equity. The Fed has since sold almost all of its Hilton debt and on Sept. 30 owned about $46 million of equity. It's not known whether it sold equity in the IPO.

      Blackstone was lucky the New York Fed and other lenders didn't play hardball. If that had happened, the firm's stay at Hilton would have been a lot less lucrative.
      -- Andrew Bary

      Sincerely,

      Carolyn Novice

 
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