Blackstone Group LP won a two-year extension on $2.65 billion of debt tied to its purchase of the La Quinta hotel chain by paying down principal, retiring some junior debt and agreeing to a higher interest rate, said a person with knowledge of the agreement.
The private-equity firm has been working for the past year to restructure about $3.05 billion of debt, said the person, who asked not to be identified because the information is private. Blackstone, based in New York, bought the Dallas-based limited-service hotelier in 2006 for about $3.4 billion, investing about $475 million of equity.
To extend the debt maturity to July 2014, Blackstone paid down about $180 million of senior debt, reducing that portion to $2.16 billion, according to the person. It also bought about $265 million of mezzanine loans at a discount to their face value, retiring that debt. The restructuring was completed today, the person said.
Peter Rose, a spokesman for Blackstone, declined to comment. The agreement was reported earlier today by the Wall Street Journal.
The new interest rate on the $2.65 billion of debt is the London interbank offered rate plus 4.3 percentage points, up from Libor plus 0.8 percentage point, the person said.
Blackstone has restructured almost $40 billion of acquisition debt in the past three years, including loans on its largest real estate purchase, the Hilton Worldwide hotel chain.
Blackstone also agreed to buy the Motel 6 lodging chain from Accor SA for $1.9 billion, the Paris-based seller said in a statement earlier today. The purchase includes 1,102 Motel 6 properties and Studio 6 extended-stay hotels in North America with more than 107,000 rooms.