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Blackstone To Cut Hilton Debt

NEW YORK CITY-The private-equity firm is aiming to shave $5 billion from its $20 billion debt, according to the Wall Street Journal.

By Ryan Clark | Updated on October 28, 2009

NEW YORK CITY-Blackstone Group LP is looking to slice off $5 billion of from its $20-billion debt load from the struggling Hilton Worldwide, according to the Wall Stree Journal . The help would come, possibly, in the form of $800 million of new equity, which would be used to buy back debt at a discounted price. In addition, there may be some ‘pretend and extend’ measures taken by attempting to push off debt maturing in 2013 to 2016 and “converting some junior slices of debt into equity,” says the Journal .

Almost exactly two years to the day after the close of the Blackstone, Hilton merger, the flailing travel & leisure market has pounded hotel investments. Blackstone acquired Hilton, making the public company private, for $26 billion, taking the global hospitality company at $47.50 per share. The deal was financed with $20.6 billion of mortgage and mezzanine secured debt incurred by subsidiaries of Hilton and approximately $5.7 billion of equity invested by investment funds affiliated with the Blackstone Group, as reported by GlobeSt.com previously.

The property was financed by a veritable gang of banks, companies and funds, namely: Bear Stearns, Bank of America, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley. This complicates things further as Bear Stearns’ investment was assumed by the Federal Reserve when the failed financial giant was sold to J.P. Morgan Chase & Co. This accounts for what the WSJ is reporting as $4 billion of Hilton debt.

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