DiamondRock obtains $400 million revolver, $350 million term loan

By Wendy Van Sickle

Columbus, Ohio, July 29 – DiamondRock Hospitality Co. entered into an agreement on Thursday that provides for a new $400 million revolving credit facility maturing on July 25, 2023 and a new $350 million term loan due July 25, 2024, according to an 8-K filing with the Securities and Exchange Commission.

The company’s operating partnership, DiamondRock Hospitality LP, is the borrower, and some of the company’s material subsidiaries are guarantors.

The revolver may be extended for an additional year upon payment of fees and subject to some conditions.

DiamondRock may increase the amount of senior credit facilities to up to $1.2 billion.

Borrowings bear interest at Libor plus a margin that ranges, based on ratio of net debt to EBITDA, from 140 basis points to 205 bps for the revolver and 135 bps to 200 bps for the term loan.

There is a fee on the unused portion of the revolver of 20 bps if the unused portion of the revolver is at least 50% and 30 bps otherwise.

Wells Fargo Securities LLC, BofA Securities, Inc., Citigroup Global Markets Inc. and U.S. Bank NA are the joint lead arrangers and bookrunners. Bank of America, NA, Citibank, NA and U.S. Bank are the co-syndication agents. KeyBank NA, Regions Bank, PNC Bank, NA and TD Bank, NA are documentation agents. Wells Fargo Bank, NA is the administrative agent.

The agreement contains a 60% maximum leverage ratio covenant; a 1.5 times minimum fixed charge coverage ratio covenant; an unencumbered leverage ratio of 60%; and an unencumbered implied debt service coverage ratio of 1.2 times. The company is also required to keep its secured debt below 45% of its total asset value.

Proceeds may be used to refinance existing debt and for working capital and general corporate purposes.

Also on Thursday, the company amended its $50 million term loan due on October 2023 to conform to the new credit agreement.

DiamondRock is a Bethesda, Md.-based real estate investment trust that owns hotel properties.

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