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Published on : Friday, June 3, 2016
Hilton Worldwide Holdings Inc. announced that Form 10 Registration Statements have been filed today with the U.S. Securities and Exchange Commission for its timeshare business and the bulk of its real estate business in connection with the reviously announced plans to pursue a separation into three distinct, publicly traded companies.
The filings provide detailed information on the business, strategy and historical financial results of both entities on a “carve-out” basis, as well as further details on license and management agreements between the companies going forward. The filings will be updated with additional information in subsequent amendments as further information on the transactions is finalized prior to separation, which is expected to be completed by the end of the year.
“The filing of the Form 10 Registration Statements is an important milestone in simplifying Hilton to a capital-light, fee-based business, while fully activating our real estate and timeshare businesses as standalone companies,” said Christopher J. Nassetta, President & Chief Executive Officer of Hilton. “As a result of the proposed transactions, we expect to unlock growth opportunities that are embedded within the three businesses and take advantage of capital market and tax efficiencies. We look forward to completing the
spins later this year, realizing significant benefits for all three companies and continuing to generate longterm value for Hilton shareholders.”
The New, Simplified Hilton: A Market-Leading Fee-Based Business On a Pro Forma1 basis, over 90% of Hilton’s Adjusted EBITDA comes from fees, of which nearly 90% are
driven by franchise fees and top-line driven base management fees. Hilton’s 13 brands each lead their respective categories, targeting a clear market segment and customer at scale. As a result, Hilton expects to continue leading the industry in organic net unit growth as a percentage of installed base without significant use of capital. Hilton will continue to be led by Chris Nassetta as Chief Executive Officer and Kevin Jacobs as Chief Financial Officer. $240 million and $250 million and an incremental $45 million to $50 million of Pro Forma management fee revenue from the real estate business. As of year-end 2016, Hilton’s Pro Forma net leverage is projected to be between 3.25x and 3.5x Adjusted EBITDA. See “Forward-Looking Statements” below for information concerning certain of the material assumptions on which this guidance is based.
Hilton will maintain a commitment to achieving a low-grade investment grade credit profile and expects to continue a dividend payout ratio of 30% to 40% of recurring cash flow with the remaining free cash available for capital return to shareholders. Hilton expects to initiate a share buyback program following the completion of the transactions.