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Hilton Grand Vacation amends credit agreement covenants, pricing
By Sara Rosenberg
New York, May 12 – Hilton Grand Vacations Inc. amended its $1 billion credit agreement to provide near-term covenant relief and long-term flexibility, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.
Under the amendment, the company’s consolidated first-lien net leverage ratio was changed to 3x after March 31 through June 30, 3.5x after June 30 through Dec. 31, 3.25x after Dec. 31 through June 30, 2021 and 3x onwards, from 2x for all periods.
As of March 31, the first-lien net leverage ratio for covenant compliance purposes was 0.62x.
Also, the company permanently expanded some first-lien net leverage and total leverage covenants for testing purposes with respect to incurrence of debt, restricted payments and investments.
Furthermore, the company may revise the calculation of consolidated EBITDA for some test periods.
In addition, pricing on the credit facility is Libor plus 175 basis points, a 25 bps increase from pre-amendment pricing, until the borrower has delivered the financial statements for the fiscal quarter ended on March 31. After that, pricing will be based on first-lien net leverage and will range from Libor plus 175 bps to 350 bps. There is a 0.25% Libor floor.
Bank of America is the administrative agent.
The amendment was completed on Friday.
“This amendment provides significant near-term flexibility to mitigate the impact of the Covid-19 pandemic, protecting our ability to invest in the business and positioning us for recovery with permanently wider latitude on covenants,” said Dan Mathewes, chief financial officer, in a news release.
Hilton Grand Vacations is an Orlando, Fla.-based timeshare company.
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