Goldman Sachs, Others Arrange ESH Hospitality Term Loan
Extended Stay America announced that its subsidiary ESH Hospitality priced a $375 million senior secured term loan at LIBOR plus 4.25%, with a minimum LIBOR of 0.75%, with a five year term, and offered at 99.5. The financing is expected to close on June 23, 2014, subject to the execution of definitive documentation and customary closing conditions.
The term loan was arranged by Goldman Sachs Bank USA, Citigroup Global Markets, Deutsche Bank Securities and J.P. Morgan Securities.
The proceeds of the term loan will be used to refinance the existing outstanding $365 million of 9.4% mezzanine debt and pay related transaction fees and expenses.
“The new term loan allows us to reduce our cash interest expense by approximately $16 million annually, lowers our average cost of debt to under 4%, and, with a one year non-call period, provides us our desired flexibility to deleverage over time” stated Peter Crage, chief financial officer.