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S&P affirms Extended Stay on add-on
Standard & Poor's said it affirmed its BB- corporate credit rating on Extended Stay America Inc.
The outlook is stable.
At the same time, the agency affirmed its BB- issue-level rating on ESH Hospitality Inc.'s $1 billion 5¼% senior unsecured notes due 2025 (inclusive of the $500 million proposed add-on), with a 3 recovery rating. The 3 recovery rating indicates an expectation for meaningful (50% to 70%; upper half of the range) recovery for lenders in the event of a default.
ESH will use the net proceeds from the proposed add-on, together with cash on hand, to repay in full $366 million outstanding of the senior secured term loan due 2019, to repay in full $111 million outstanding of its component B 2012 mortgage loan due 2017 and repay about $22 million of component C of the 2012 mortgage loan due 2019.
"The rating affirmation reflects our expectation for continued improvement in operating performance that enables the company to sustain total adjusted debt to EBITDA below 5x and FFO to total adjusted debt above 12% over the next two years," S&P credit analyst Carissa Schreck said in a news release.
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