Business Context and Reporting Period
This Form 8-K was filed by Wyndham Worldwide Corporation on March 23, 2018. The filing discloses a significant capital market transaction by its wholly-owned subsidiary, Wyndham Hotels & Resorts, Inc. ("Wyndham Hotels"), in anticipation of a planned spin-off that will make Wyndham Hotels an independent, publicly traded company.
Key Financial Metrics and Capital Structure
The filing details a proposed financing package to support the acquisition of La Quinta Holdings, Inc.'s franchising and management businesses. Key financial figures include:
- Debt Offering: Proposed private offering of $500 million in senior unsecured notes due 2026.
- Term Loan Facility: Expected entry into a $1,600 million senior secured term loan B credit facility.
- Revolving Credit Facility: Expected entry into a $750 million senior secured revolving credit facility (expected to be undrawn at closing).
- Guarantees: Wyndham Worldwide will initially guarantee the notes on a senior unsecured basis, with the guarantee to be released immediately prior to the spin-off consummation.
The filing text does not provide specific values for revenue, profit, cash flow, margins, or existing liquidity positions.
Material Changes and Strategic Actions
The primary material change is the initiation of a debt financing strategy to fund the acquisition of La Quinta. The proceeds from the $500 million note offering, combined with borrowings from the new Credit Facilities, are designated for:
- Financing the cash consideration for the La Quinta acquisition.
- Paying related fees and expenses.
- General corporate purposes.
Wyndham Hotels expects to adjust the amount of notes offered and the size of the Credit Facilities depending on market conditions.
Guidance, Risks, and Contingencies
Contingencies: The offering of the notes is subject to market and other conditions. The transaction is contingent upon the completion of the previously announced spin-off of Wyndham Hotels from Wyndham Worldwide.
Risks and Regulatory Status: The notes and related guarantees have not been registered under the Securities Act of 1933 and will not be offered or sold absent registration or an applicable exemption. The information provided in this filing is not deemed "filed" for purposes of Section 18 of the Exchange Act and is not subject to the liabilities of that section.
Investor Verification Checklist
- Verify the final terms and pricing of the $500 million senior unsecured notes due 2026.
- Confirm the definitive closing date of the La Quinta acquisition and the spin-off of Wyndham Hotels.
- Review the final structure of the $1,600 million term loan and $750 million revolving credit facility.
- Monitor the release of Wyndham Worldwide's guarantee on the notes prior to the spin-off consummation.
- Examine Exhibit 99.1 for supplemental information regarding Wyndham Hotels and La Quinta.