(Bloomberg) -- A group of lenders to Aimbridge Hospitality LLC, including KKR & Co,. and Capital Research and Management Co., are in talks to restructure the hotel management company’s debt, according to people familiar with the situation.
The private negotiations come as Aimbridge’s need for cash has intensified in recent months, a liquidity crunch that’s dragged down the value of its loans, said the people, who asked not to be identified discussing a private matter.
The company, backed by private equity firm Advent International, has seen a decline in room count, which is impacting its revenue, Bloomberg previously reported.
Representatives with Advent, KKR and Capital Research declined to comment, while messages left with the company were not immediately returned.
S&P Global Ratings slashed Aimbridge’s credit rating to CCC from CCC+ in October, citing a heightened refinancing risk, “unsustainable debt levels” and an expectation the company will see limited cash flow through 2025. Aimbridge’s “rooms base” has been declining partly due to hotel sales, S&P said in its report detailing the downgrade.
Aimbridge needs faces a load of debt coming due over the next couple of years, including a revolver that matures in February 2025, according to S&P. It also has a roughly $1 billion first-lien term loan due in 2026 and a $160 million second-lien term loan due the year after, S&P said in its report.
Its first-lien term loan coming due in 2026 was quoted around 65.4 cents on the dollar, down from 97 cents in mid-October, according to data compiled by Bloomberg.
A group of first-lien lenders to Aimbridge Hospitality are working with Moelis & Co and Gibson Dunn & Crutcher LLP for debt advice, while Aimbridge has retained Evercore. Representatives with Evercore and Moelis declined to comment, while messages left with Gibson Dunn were not returned.
Aimbridge’s portfolio includes more than 1,500 properties and spans 23 countries, its website shows. Advent acquired a majority stake in Aimbridge in 2019.
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