Moody's may cut Extended Stay

Moody's Investors Service said it placed all ratings of Extended Stay America on review for possible downgrade.

Ratings on review include the $200 million revolving credit facility due 2007 at Ba3; $50 million A-1 facility term loan due 2007 at Ba3; $50 million A-2 facility delayed draw term loan due 2007 at Ba3; $100 million A-3 facility delayed draw term loan due 2007 at Ba3; $500 million term loan due 2008 at Ba3; $200 million 9.15% senior subordinated notes due 2008 at B2; $300 million 9.87% senior subordinated notes due 2011 at B2; senior implied rating at Ba3; and senior unsecured long-term issuer rating at B1.

Moody's said the ratings action was prompted by Extended Stay America's announcement that its board of directors has approved a plan under which it will be acquired by an affiliate of The Blackstone Group for an estimated purchase price of $3.1 billion, including debt.

Blackstone expects to finance the transaction with about $2.7 billion in new bank debt with the proceeds used to repay existing bank debt and $500 million of outstanding subordinated notes. The transaction is expected to close in the second quarter of 2004.

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