Saturday, 23 August 2014
Last updated 1 day ago
Dec 13 2013 | 12:11pm ET
The Blackstone Group turned its potentially disastrous purchase of Hilton Worldwide Holdings into a very handsome paper profit when it took the famed hotel chain public yesterday.
Hilton returned to the public markets on the New York Stock Exchange, giving it a valuation of $20 billion. Blackstone did not sell any of its stake in the deal, so its 750 million shares are worth about $16.1 billion.
And while the official purchase price for Hilton in 2007 was $26 billion, Blackstone put up only $5.7 billion, borrowing the rest. When the financial crisis struck, Blackstone wrote down much of its investment in Hilton and restructured its debt, buying some back from its banks for just 35 cents on the dollar. All told, Blackstone put up only $6.5 billion of its own money—and now owns three-quarters of Hilton.
During its stewardship, Blackstone also used Hilton's profits to pay down the roughly $20.5 billion in debt it took out in 2007. And some of the $2.4 billion raised yesterday will pay down even more.
"They've accomplish a lot through leverage," former Hilton CFO Robert La Forgia told The New York Times. "They almost lost the company, and might have without the debt restructuring.
Aug 4 2014 | 7:42am ET
By now, U.S. and international subscribers have received their home or office delivery of the special 500th issue of Futures magazine. You can too!—a very special offer follows. The issue is the largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders. Read more…
The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.
The Alpha Pages Editor's Note