HNA to sell Hilton stake in secondary offering

Hilton Worldwide Holdings’ main shareholder HNA Tourism Group will sell about 63 million shares of Hilton common stock in a secondary offering, making good on signals it would exit its stake in the U.S. hotel operator.

The sale is an attempt by HNA Tourism’s parent, Chinese aviation-to-financial services conglomerate HNA Group to restructure its far-flung operations and raise cash by selling equity and prime real estate assets.

Its restructuring follows a $50 billion acquisition spree over the past two years, which has sparked scrutiny of the firm’s opaque ownership and use of leverage.

HNA Tourism held about 82.5 million shares in Hilton as of April 5. HNA Group said last week it would sell some or all of the $6.3 billion stake in Hilton.

Hilton Worldwide Holdings announced on April 9 that a selling stockholder affiliated with HNA Tourism Group has commenced a secondary offering of 63,050,000 shares of Hilton common stock. The underwriters will have a 30-day option to purchase up to an additional 9,450,000 shares of common stock from the selling stockholder.

Hilton is not offering any shares of common stock in the offering and will not receive any proceeds from the sale of shares in this offering. In addition, none of Hilton’s officers or directors are selling any shares of common stock beneficially owned by them in the offering.

Goldman Sachs & Co., J.P. Morgan, Deutsche Bank Securities, BofA Merrill Lynch, and Morgan Stanley are acting as joint book-running managers and representatives of the underwriters for the offering. UBS Investment Bank, Barclays, Wells Fargo Securities, and Credit Suisse are also acting as joint book-running managers and underwriters for the offering. In addition, Evercore is serving as an advisor to the company in connection with the offering.

Hilton, which owns the Waldorf Astoria brand, raised its first-quarter adjusted earnings forecast to 52 to 54 cents per share from a previous range of 43 to 47 cents.

Hilton also lifted its forecast for RevPAR to 3.5 to 4 percent, from 1 to 3 percent.

Its stock rose as much as 2.6 percent on April 9 morning.

The RevPAR forecast was stronger than expected, said Morgan Stanley analyst Thomas Allen, adding it was likely supported by continued strength in foreign markets, particularly in the Asia Pacific region.

Hilton recorded the strongest growth in its international business from Asia Pacific in the fourth quarter, led by rising demand in China as travel picks up pace in the world’s second largest economy.

The company said on April 9 underwriters will have a 30-day option to purchase up to an additional 9.4 million shares of its common stock from HNA.

Hilton has agreed to buy back from HNA 10 million shares of its common stock at a price equal to the one at which the underwriters will purchase shares from HNA, less 1 percent of the public offering price.

Hilton will have the option to repurchase from HNA up to an additional 6.5 million shares of its common stock at the same price.

Source: Reuters/Hilton

Image courtesy of © 2018 Hilton Worldwide.