Hilton Grand Vacations secures $1B new credit facility

Hilton Grand Vacations Inc . (NYSE:HGV), currently valued at $4.01 billion, announced on Monday that it has entered into a material definitive agreement resulting in a new $1 billion revolving credit facility. This new financial structure is set to mature on January 31, 2030, providing the company with extended financial flexibility. According to InvestingPro analysis, HGV maintains strong liquidity with a current ratio of 4.64x, indicating robust short-term financial health.

The agreement, which took place on January 31, 2025, involves Hilton Grand Vacations Inc., Hilton Grand Vacations Parent LLC, Hilton Grand Vacations Borrower LLC, and several subsidiary guarantors. This amendment to the existing credit agreement also led to the termination of the company’s previous revolving credit commitments. With total debt standing at $6.71 billion, this refinancing comes at a crucial time for the company, which appears slightly overvalued at its current trading price of $40.74.

Interest rates for the new facility will vary based on the company’s Consolidated First Lien Net Leverage Ratio, with a margin over the base rate or Term SOFR (Secured Overnight Financing Rate). The agreement specifies a Term SOFR floor of 0% and allows for voluntary prepayment without penalties.

In addition to the new revolving credit facility, the amendment brings down applicable rates for various term loans previously secured by the company and modifies certain covenants to offer more operational leeway. This includes an increase in the Consolidated First Lien Net Leverage Ratio financial covenant, enhancing the company’s borrowing capacity.

The new credit facility is guaranteed by Hilton Grand Vacations Parent LLC and the Subsidiary Guarantors and is secured by a first-priority interest in nearly all of the assets of the involved parties. These loans will rank equally with the company’s existing term loans in terms of payment and security rights.

This financial maneuver is part of Hilton Grand Vacations’ broader strategy to strengthen its capital structure and support future growth initiatives. The information disclosed is based on a press release statement and filings with the Securities and Exchange Commission.

In other recent news, Hilton Grand Vacations has seen a series of significant developments. The company’s Executive Vice President and Chief Human Resources Officer, Mr. Pablo Brizi, is set to depart, and the company has reported revenue growth of 18.38% over the last twelve months. Hilton Grand Vacations reported third-quarter earnings that fell short of analyst expectations, with adjusted earnings per share at $0.67, missing the consensus estimate of $0.76. However, the company’s revenue slightly surpassed expectations at $1.31 billion.

Hilton Grand Vacations completed a considerable securitization of timeshare loans, amounting to $500 million, and expanded its credit facility from $750 million to $850 million. Barclays (LON:BARC) recently downgraded Hilton Grand Vacations stock to equal weight and adjusted the price target to $41.00.

The company has also amended its license agreement following the recent acquisition of Bluegreen Vacations (NYSE:BXG) Holding Corporation, facilitating the integration of Bluegreen into Hilton Grand Vacations’ operations and including an updated fee arrangement and a rebranding plan for Bluegreen properties. These are the recent developments for Hilton Grand Vacations as it continues to navigate the hospitality industry landscape.

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