Bond Hilton Global Finance 4.875% ( US432833AF84 ) in USD

Hilton Global Finance

99.89 % ▼

United States

US432833AF84 ( in USD )

4.875% per year ( payment 2 times a year)

14/01/2030

Prospectus brochure of the bond Hilton Worldwide Finance US432833AF84 en USD 4.875%, maturity 14/01/2030

432833AF8

BB+ ( Non-investment grade speculative )

Ba2 ( Non-investment grade speculative )

15/07/2026 ( In 94 days )

Hilton Worldwide Finance is the global finance and accounting arm of Hilton Worldwide Holdings Inc., responsible for financial planning, analysis, reporting, and treasury functions across the company's diverse portfolio of hotels and hospitality businesses.

The Bond issued by Hilton Global Finance ( United States ) , in USD, with the ISIN code US432833AF84, pays a coupon of 4.875% per year.
The coupons are paid 2 times per year and the Bond maturity is 14/01/2030

The Bond issued by Hilton Global Finance ( United States ) , in USD, with the ISIN code US432833AF84, was rated Ba2 ( Non-investment grade speculative ) by Moody's credit rating agency.

The Bond issued by Hilton Global Finance ( United States ) , in USD, with the ISIN code US432833AF84, was rated BB+ ( Non-investment grade speculative ) by Standard & Poor's ( S&P ) credit rating agency.

Document
424B3 1 a2019s-4finalprospectus424.htm 424B3
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-233870
PROSPECTUS

HILTON DOMESTIC OPERATING COMPANY INC.
Exchange Offer for
$1,000,000,000 of 4.875% Senior Notes due 2030
Offer for outstanding unregistered 4.875% Senior Notes due 2030 (the "outstanding notes") of Hilton Domestic Operating Company Inc. (the "Issuer"), in
the aggregate principal amount of $1,000,000,000 in exchange for up to $1,000,000,000 in aggregate principal amount of 4.875% Senior Notes due 2030 (the
"exchange notes" together with the outstanding notes, the "notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities
Act").
The exchange notes will be the obligation of the Issuer and will be guaranteed on a senior unsecured basis by Hilton Worldwide Finance LLC ("Parent"),
the direct parent company of the Issuer, Hilton Worldwide Parent LLC ("HWP"), the direct parent company of Parent, Hilton Worldwide Holdings Inc. ("HLT
Parent"), the direct parent company of HWP, and each of Parent's existing and future wholly owned domestic restricted subsidiaries (other than the Issuer) to
the extent such entities guarantee indebtedness under Parent's senior secured credit facilities or certain other indebtedness of Parent, the Issuer or any
subsidiary guarantor as described herein.
We are conducting the exchange offer in order to provide you with an opportunity to exchange your unregistered outstanding notes for freely
tradable exchange notes that have been registered under the Securities Act.
The Exchange Offer
·
We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are
freely tradable.
·
You may withdraw tenders of outstanding notes at any time prior to the expiration date of the exchange offer.
·
The exchange offer expires at 5:00 p.m., New York City time, on November 4, 2019, which is the 21st business day after the date of this
prospectus, unless extended. We do not currently intend to extend the expiration date.
·
The exchange of the outstanding notes for the exchange notes in the exchange offer will not constitute a taxable event for U.S. federal income tax
purposes.
·
The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the exchange
notes will be freely tradable.
Results of the Exchange Offer
·
The exchange notes may be sold in the over-the-counter market, in negotiated transactions or through a combination of such methods. We do not
plan to list the exchange notes on a national market.
All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In
general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we
will register the outstanding notes under the Securities Act.
You should carefully consider the "Risk Factors" beginning on page 14 of this prospectus before participating in the exchange offer.
Each broker dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker dealer
in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market
making activities or other trading activities.
Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of the exchange notes to
be distributed in the exchange offer or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is October 3, 2019.
We have not authorized anyone to provide you with information different from that contained in this prospectus. This prospectus may
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be used only for the purposes for which it has been published and we do not take any responsibility for, or can provide any assurance as to
the reliability of, any information other than the information in this prospectus. We are not making an offer of these securities in any state
where the offer is not permitted.
TABLE OF CONTENTS

Page
FORWARD-LOOKING STATEMENTS
ii
TRADEMARKS AND SERVICE MARKS
ii
INDUSTRY AND MARKET DATA
ii
BASIS OF PRESENTATION
ii
PROSPECTUS SUMMARY
1
RISK FACTORS
14
USE OF PROCEEDS
40
CAPITALIZATION
41
SELECTED FINANCIAL DATA
42
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
43
BUSINESS
65
MANAGEMENT
78
EXECUTIVE AND DIRECTOR COMPENSATION
83
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
110
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
111
DESCRIPTION OF OTHER INDEBTEDNESS
113
DESCRIPTION OF THE EXCHANGE NOTES
119
THE EXCHANGE OFFER
186
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
195
CERTAIN ERISA CONSIDERATIONS
196
PLAN OF DISTRIBUTION
198
LEGAL MATTERS
199
EXPERTS
199
WHERE YOU CAN FIND MORE INFORMATION
199
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
i
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements include, but are not limited to, statements related to our
expectations regarding the performance of our business, our financial results, our liquidity and capital resources and other non-historical
statements. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects,"
"potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the
negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties,
including, among others, risks inherent to the hospitality industry, macroeconomic factors beyond our control, competition for hotel guests and
management and franchise contracts, risks related to doing business with third-party hotel owners, performance of our information technology
systems, growth of reservation channels outside of our system, risks of doing business outside of the United States ("U.S.") and our indebtedness.
Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these
statements. We believe these factors include, but are not limited to, those described under "Risk Factors" in this prospectus. These factors should
not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We
undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments
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or otherwise, except as required by law.
TRADEMARKS AND SERVICE MARKS
Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, LXR Hotel & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Signia
Hilton, Curio Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by Hilton, Embassy Suites by Hilton, Motto by Hilton, Hilton
Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton, Hilton Grand Vacations, Hilton Honors and
other trademarks, trade names and service marks of Hilton and our brands appearing in this prospectus are the property of Hilton and our affiliates.
Solely for convenience, the trademarks, trade names and service marks referred to in this prospectus are without the ® and TM symbols, but
such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of
the applicable licensors to these trademarks, trade names and service marks. All trademarks, trade names and service marks appearing in this
prospectus are the property of their respective owners.
INDUSTRY AND MARKET DATA
Within this prospectus, we reference information and statistics regarding various industries and sectors. We have obtained this information and
statistics from various independent third-party sources, including independent industry publications, reports by market research firms and other
independent sources. STR, Inc. ("STR") and CBRE Hotels Americas Research ("CBRE") are the primary sources for third-party market data and
industry statistics and forecasts, respectively, included in this prospectus. STR does not guarantee the performance of any company about which it
collects and provides data. Nothing in the STR or CBRE data should be construed as advice. Some data and other information are also based on our
good faith estimates, which are derived from our review of internal surveys and independent sources. We believe that these external sources and
estimates are reliable, but have not independently verified them.
BASIS OF PRESENTATION
Except where otherwise indicated, financial information included in this prospectus is of HLT Parent and its subsidiaries, including Parent and
its subsidiaries (including the Issuer), on a consolidated basis. HLT Parent has no independent operations and has no material assets other than its
ownership of 100% of the equity interests in HWP, which, in turn, owns 100% of the equity interests in Parent and consolidates the financial
position and results of all of the operating subsidiaries included in the consolidated historical financial statements of HLT Parent included in this
prospectus. As a result, the consolidated financial information included in this prospectus with respect to HLT Parent is substantially the same as
Parent's financial information.
On January 3, 2017, we completed the spin-offs of a portfolio of hotels and resorts, as well as our timeshare business, into two independent,
publicly traded companies: Park Hotels & Resorts Inc. ("Park") and Hilton Grand Vacations Inc. ("HGV"), respectively, (the "spin-offs"). HLT
Parent did not retain any interest in Park or HGV, but did enter into long-term management and franchise contracts with Park for the portfolio of
hotels and resorts held by it at the time of the spin-offs and a license agreement with HGV for the timeshare business. See the section titled "Risk
Factors" in this prospectus. This prospectus
ii
presents our business and results of operations as of and for the periods indicated, giving effect to the spin-offs, with the combined historical
financial results of Park and HGV reflected as discontinued operations.
As used in this prospectus, unless otherwise specified or the context otherwise requires, references to:
·
"Hilton," "the Company," "we," "us" and "our" refer to HLT Parent and its consolidated subsidiaries, including the Issuer;
·
"ADR" or "average daily rate" means hotel room revenue divided by the total number of room nights sold for a given period;
·
"Blackstone" refers to investment funds associated with or designated by The Blackstone Group L.P. and their affiliates, our former
majority shareholder;
·
"comparable hotels" mean those hotels that: (i) were active and operating in our system for at least one full calendar year as of the end of
the current period, and open January 1st of the previous year; (ii) have not undergone a change in brand or ownership type during the
current or comparable periods presented, excluding the hotel properties distributed in the spin-offs; and (iii) have not sustained substantial
property damage, business interruption, undergone large-scale capital projects or for which comparable results are not available;
·
"Existing Senior Notes" refers to our outstanding 4.250% Senior Notes due 2024 (the "2024 Notes"), our outstanding 4.625% Senior
Notes due 2025 (the "2025 Notes"), our outstanding 5.125% Senior Notes due 2026 (the "2026 Notes") and our outstanding 4.875%
Senior Notes due 2027 (the "2027 Notes");
·
"HGV Parent" refers to Hilton Grand Vacations Inc., a Delaware corporation;
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·
"Hilton Grand Vacations" or "HGV" refers to HGV Parent and its consolidated subsidiaries;
·
"HLT Parent" refers to Hilton Worldwide Holdings Inc., a Delaware corporation, that is the direct parent company of Parent and will be a
parent guarantor of the exchange notes;
·
"HOC" refers to Hilton Domestic Operating Company Inc., a Delaware corporation, that is the issuer of the exchange notes offered
hereby;
·
"HWP" refers to Hilton Worldwide Parent LLC, a Delaware limited liability company, that is the direct parent company of Parent and will
be a parent guarantor of the exchange notes;
·
"Issuer" refers to Hilton Domestic Operating Company Inc., a Delaware corporation, that is the issuer of the exchange notes offered
hereby;
·
a "luxury" hotel refers to a luxury hotel as defined by STR;
·
a "midscale" hotel refers to a midscale hotel as defined by STR;
·
"occupancy" means the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels
for a given period;
·
"Parent" refers to Hilton Worldwide Finance LLC, a Delaware limited liability company, that is the direct parent company of the Issuer
·
"Park Hotels & Resorts" or "Park" refers to Park Parent and its consolidated subsidiaries;
·
"Park Parent" refers to Park Hotels & Resorts Inc., a Delaware corporation;
·
"RevPAR" or "revenue per available room" means hotel room revenue divided by the total number of room nights available to guests for a
given period;
iii
·"RevPAR index" measures a hotel's relative share of its segment's revenue per available room. For example, if a subject hotel's RevPAR is
$50 and the RevPAR of its competitive set is $50, the subject hotel would have no RevPAR index premium. If the subject hotel's
RevPAR totaled $60, its RevPAR index premium would be 20%, which indicates that the subject hotel has outperformed other hotels in
its competitive set;
·
our "hotels" and "rooms" refer to the hotels and resorts managed, franchised, owned or leased by us. The majority of our hotels and
resorts are owned by third-party owners;
·
an "upper midscale" hotel refers to an upper midscale hotel as defined by STR;
·
an "upper upscale" hotel refers to an upper upscale hotel as defined by STR; and
·
an "upscale" hotel refers to an upscale hotel as defined by STR.
Defined terms in the financial statements have the meanings ascribed to them in the financial statements.
iv
PROSPECTUS SUMMARY
This summary highlights information appearing elsewhere in this prospectus and may not contain all of the information that may be
important to you. You should read this entire prospectus carefully, including the information set forth under the heading "Risk Factors" and
our consolidated financial statements, before participating in the exchange offer.
Hilton
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Hilton is one of the largest and fastest growing hospitality companies in the world, with 5,872 properties comprising 939,297 rooms in
114 countries and territories as of June 30, 2019. For over 100 years, Hilton has been an innovator in its industry, driven by the vision of
our founder, Conrad Hilton, "to fill the earth with the light and warmth of hospitality." Our premier brand portfolio includes: our luxury and
lifestyle hotel brands, Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, Conrad Hotels & Resorts and Canopy by Hilton; our full
service hotel brands, Signia Hilton, Hilton Hotels & Resorts, Curio Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by
Hilton and Embassy Suites by Hilton; our focused service hotel brands, Motto by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by
Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton; and our timeshare brand, Hilton Grand Vacations. As of June 30, 2019,
we had more than 94 million members in our award-winning guest loyalty program, Hilton Honors, a 21 percent increase from June 30,
2018.
Our Competitive Strengths
We believe the following competitive strengths provide the foundation for our position as a leading global hospitality company.
·
World-Class Hospitality Brands. Our globally recognized, world-class brands have defined the hospitality industry. Our flagship
Hilton Hotels & Resorts brand often serves as an introduction to our wider range of brands, including those in the luxury segment,
midscale segment and everything in between, that are designed to accommodate any customer's needs anywhere in the world. Our
brands have achieved an average global RevPAR index premium of 15% for the six months ended June 30, 2019, based on STR
data. This means that our brands achieve on average 15% more revenue per room than competitive properties in similar markets.
The demonstrated strength of our brands makes us a preferred partner for hotel owners.
·
Leading Global Presence and Scale. We are one of the largest hospitality companies in the world with 5,872 properties and
939,297 rooms in 114 countries and territories as of June 30, 2019. We have hotels in key urban destinations throughout our key
operating regions and 592 hotels located at or near airports around the world. Our global presence allows us to serve our loyal
customers throughout the world and to introduce our award-winning brands to customers in new markets. These world-class
brands facilitate system growth by providing hotel owners with a variety of options to address each market's specific needs. In
addition, the diversity of our operations reduces our exposure to business cycles, individual market disruptions and other risks. Our
robust commercial services platform allows us to take advantage of our scale to more effectively deliver products and services that
drive customer preference and enhance commercial performance on a global basis.

·
Large and Growing Loyal Customer Base. Serving our customers is our first priority. By continually adapting to customer
preferences and providing our customers with superior experiences, we have improved our overall customer satisfaction ratings
since 2007. We earned 42 first place awards in the J.D. Power North America Guest Satisfaction rankings since 1999. Hilton
Honors unites all our brands, encourages customer loyalty and allows us to provide tailored promotions, messaging and customer
experiences. Membership in our Hilton Honors program continues to increase, and, as of June 30, 2019, there were more than 94
million Hilton Honors members, a 21% increase from June 30, 2018.
·
Significant Embedded Growth. We expect to grow through new room additions, as upon completion, our industry-leading
development pipeline would result in a 40% increase in our room count with minimal capital investment from us. We also expect
to grow through improvement in same-store performance driven by strong anticipated industry fundamentals. CBRE predicts that
lodging industry RevPAR in the U.S., where 73% of our system rooms are located, will grow 0.9% in 2019 and 1.2% in 2020. In
addition, our franchise revenues should grow over time as franchise contracts renew at our published license rates, which are
higher than our current effective rates. For the twelve months ended June 30, 2019, our weighted average effective license rate
across our brands was 4.9% of room revenue, and our weighted average published license rate was 5.6% as of June 30, 2019. We
also expect our incentive management fees,
1
which are linked to hotel profitability measures, to increase as a result of new unit growth and as demand increases in the industry.
·
Strong Cash Flow Generation. We generate significant cash flows from operating activities. During 2018, we generated $1.3
billion in cash flow from operating activities, and during the six months ended June 30, 2019, we generated $650 million in cash
flows from operating activities. We believe that our focus on cash flow generation, the relatively low investment required to grow
our business, and our disciplined approach to capital allocation position us to maximize opportunities for profitability and growth.
·
Aligned Culture and Organization. As an organization of people serving people, it is imperative that we attract and retain best-in-
class talent to serve our various stakeholders. Our purpose-led, performance-driven culture begins with an intense alignment
around our mission, vision, values and key strategic priorities. Our President and Chief Executive Officer, Christopher J. Nassetta,
has more than 31 years of experience in the hotel industry, leading Hilton for over 11 years and previously serving as President
and Chief Executive Officer of Host Hotels & Resorts, Inc. He and the balance of our executive management team have been
instrumental in transforming our organization and building a culture that attracts, develops and retains leaders at all levels of the
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organization who are focused on delivering exceptional service to our customers every day. We rely on our more than 171,000
employees to execute our strategy and continue to enhance our products and services to ensure that we remain at the forefront of
performance and innovation in the lodging industry.
Our Business and Growth Strategy
The following are key elements of our strategy to become the preeminent global hospitality company--the first choice of guests,
employees and owners alike:
·
Expand our Global Network. We intend to build on our leading position in the U.S. and expand our global footprint. We had
approximately 18% of the market share of rooms under construction as of June 30, 2019, based on STR data. We aim to increase
the relative contribution of our international operations by increasing the number of rooms in our system that are located outside of
the U.S., and as of June 30, 2019, over half of our rooms in our development pipeline are located outside of the U.S. We plan to
continue to expand our global footprint by introducing the right brands with the right product positioning in targeted markets and
allocating business development resources effectively to drive high-quality new unit growth in every region of the world.

·
Grow our Fee-Based Businesses. We intend to grow our higher margin, fee-based businesses by developing new third-party
hotels and converting existing hotels to our brands. Our development pipeline consisted of approximately 373,000 rooms as of
June 30, 2019. Upon completion, this pipeline of new, third-party owned hotels would result in a 41% increase in our managed and
franchised hotel room count with minimal capital investment from us. In addition, we aim to increase the average effective
franchise fees we receive over time by renewing and entering into new franchise contracts at our current published franchise fee
rates.
·
Strengthen and Enhance our Brands and Commercial Services Platform. We intend to enhance our customer experience in all
of our service offerings by delivering distinctive, high quality, consistent brand management and continuing to develop products
and services that drive customer preference and increased RevPAR premiums. We will continue to innovate in the delivery of
modern products and service standards that are relevant and meet evolving customer needs. We believe providing distinctive
customer experiences will deliver financial results that support incremental owner investment in our hotels. We also focus on
providing products and services that drive opportunities for growth in the U.S. and tailoring our products as appropriate to meet
the needs of customers and developers outside the U.S. We will continue to enhance our commercial services platform to ensure
we have a formidable sales, pricing, marketing and distribution platform to drive premium commercial performance to our entire
system of hotels. We also will continue to invest in our Hilton Honors guest loyalty program to ensure it remains relevant to our
customers and drives customer loyalty and value to our hotel owners.
2
Our Structure
The following diagram illustrates our simplified organizational structure as of the date of this prospectus after giving effect to the
exchange offer. This diagram is provided for illustrative purposes only and does not show all legal entities or obligations of such entities:
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____________
(1)
Each of HLT Parent and HWP is a guarantor of indebtedness under the Parent's senior secured credit facilities ("Senior Secured Credit Facilities") and the
Existing Senior Notes and will be a guarantor of the exchange notes offered hereby. Neither HLT Parent nor HWP is subject to the restrictive covenants in
the credit agreement and indentures governing such indebtedness.
(2)
Our Senior Secured Credit Facilities are comprised of: (i) a $1.75 billion senior secured revolving credit facility (the "Revolving Credit Facility") and (ii) a
$2,619 million senior secured term loan facility due 2026 (the "Term Loans"). As of June 30, 2019, we had $1,691 million of unutilized borrowing capacity
under the Revolving Credit Facility (after giving effect to $59 million of outstanding letters of credit). See "Description of Other Indebtedness--Senior
Secured Credit Facilities" for additional information. Subsequent to completing the exchange offer, we intend to merge Parent with and into its direct
subsidiary, the Issuer, with the Issuer as the surviving entity.
(3)
For the six months ended June 30, 2019, our non-guarantor subsidiaries represented $909 million, or 49%, of our total revenues, excluding other revenues
from managed and franchised properties, and $245 million, or 22%, of our Adjusted EBITDA. For the years ended December 31, 2018, 2017 and 2016, our
non-guarantor subsidiaries represented $1,906 million, or 52%, $1,835 million, or 54%, and $1,785 million, or 60%, of our total revenues, respectively,
excluding other revenues from managed and franchised properties, and $501 million, or 24%, $502 million, or 26%, and $441 million, or 30%, of our
Adjusted EBITDA, respectively.
Corporate Information
Hilton Domestic Operating Company Inc., a Delaware corporation, was incorporated under the laws of the State of Delaware on
July 12, 2016. Our principal executive offices are located at 7930 Jones Branch Drive, Suite 1100, McLean, Virginia 22102 and our
telephone number is (703) 883-1000.
3
The Exchange Offer
The following summary is provided solely for your convenience and is not intended to be complete. You should read the full text and
more specific details contained elsewhere in this prospectus for a more detailed description of the notes.
General ....................................................................... On June 20, 2019, the Issuer issued an aggregate of $1,000,000,000 principal amount
of 4.875% Senior Notes due 2030 in a private offering. In connection with the
private offering of the outstanding notes, the Issuer and the guarantors entered into a
registration rights agreement with the initial purchasers in which they agreed, among
other things, to complete the exchange offer within 450 days after the date of
issuance and sale of the outstanding notes. You are entitled to exchange in the
exchange offer your outstanding notes for the exchange notes which are identical in
all material respects to the outstanding notes except:
·
the exchange notes have been registered under the Securities Act;
·
the exchange notes are not entitled to any registration rights which are
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applicable to the outstanding notes under the registration rights agreement; and
·
the additional interest provision of the registration rights agreement is no longer
applicable.
The Exchange Offer ................................................... The Issuer is offering to exchange up to $1,000,000,000 aggregate principal amount of
4.875% Senior Notes due 2030 which have been registered under the Securities Act,
for a like amount of outstanding notes.
You may only exchange outstanding notes in denominations of $2,000 and integral
multiples of $1,000, in excess thereof.
Resale ......................................................................... Based on an interpretation by the staff of the SEC set forth in no-action letters issued
to third parties, the Issuer believes that the exchange notes issued pursuant to the
exchange offer in exchange for outstanding notes may be offered for resale, resold
and otherwise transferred by you (unless you are our "affiliate" within the meaning
of Rule 405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that:
·
you are acquiring the exchange notes in the ordinary course of your business;
and
·
you have not engaged in, do not intend to engage in, and have no arrangement or
understanding with any person to participate in, a distribution of the exchange
notes.
Expiration Date .......................................................... The exchange offer will expire at 5:00 p.m., New York City time, on November 4,
2019, which is the 21st business day after the date of this prospectus, unless extended
by the Issuer. The Issuer does not currently intend to extend the expiration date.
If you are a broker-dealer and receive exchange notes for your own account in
exchange for outstanding notes that you acquired as a result of market making
activities or other trading activities, you must acknowledge that you will deliver this
prospectus in connection with any resale of the exchange notes. See "Plan of
Distribution."
4
Any holder of outstanding notes who:
·
is our affiliate;
·
does not acquire exchange notes in the ordinary course of its business; or
·
tenders its outstanding notes in the exchange offer with the intention to
participate, or for the purpose of participating, in a distribution of exchange
notes;
cannot rely on the position of the staff of the SEC enunciated in Morgan Stanley &
Co. Inc. (available June 5, 1991) and Exxon Capital Holdings Corp. (available
May 13, 1988), as interpreted in the SEC's letter to Shearman & Sterling (available
July 2, 1993), or similar no-action letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale of the exchange notes.
Withdrawal ................................................................. You may withdraw the tender of your outstanding notes at any time prior to the
expiration of the exchange offer. The Issuer will return to you any of your
outstanding notes that are not accepted for any reason for exchange, without expense
to you, promptly after the expiration or termination of the exchange offer.
Interest on the Exchange Notes and the
Outstanding Notes .............................................. The exchange notes will bear interest at a rate of 4.875% per annum from the most
recent date to which interest has been paid on the outstanding notes and will be
payable semi-annually on January 15 and July 15. No interest will be paid on
outstanding notes following their acceptance for exchange.
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Conditions to the Exchange Offer .............................. The exchange offer is subject to customary conditions, which the Issuer may waive.
See "The Exchange Offer--Conditions to the Exchange Offer."
Procedures for Tendering Outstanding Notes ............. If you wish to participate in the exchange offer, you must complete, sign and date the
accompanying letter of transmittal, or a facsimile of such letter of transmittal,
according to the instructions contained in this prospectus and the letter of transmittal.
You must then mail or otherwise deliver the letter of transmittal, or a facsimile of
such letter of transmittal, together with the outstanding notes and any other required
documents, to the exchange agent at the address set forth on the cover page of the
letter of transmittal.
If you hold outstanding notes through The Depository Trust Company ("DTC") and
wish to participate in the exchange offer, you must comply with the Automated
Tender Offer Program procedures of DTC by which you will agree to be bound by
the letter of transmittal. By signing, or agreeing to be bound by, the letter of
transmittal, you will represent to us that, among other things:
·
you are not our "affiliate" within the meaning of Rule 405 under the Securities
Act;
·
you do not have an arrangement or understanding with any person or entity to
participate in the distribution of the exchange notes;
·
you are acquiring the exchange notes in the ordinary course of your business;
and
5
·
if you are a broker-dealer that will receive exchange notes for your own account
in exchange for outstanding notes that were acquired as a result of market
making activities, that you will deliver a prospectus, as required by law, in
connection with any resale of such exchange notes.
Special Procedures for Beneficial Owners ................. If you are a beneficial owner of outstanding notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, and you wish to
tender those outstanding notes in the exchange offer, you should contact the
registered holder promptly and instruct the registered holder to tender those
outstanding notes on your behalf. If you wish to tender on your own behalf, you
must, prior to completing and executing the letter of transmittal and delivering your
outstanding notes, either make appropriate arrangements to register ownership of the
outstanding notes in your name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable time
and may not be able to be completed prior to the expiration date.
Guaranteed Delivery Procedures ................................ If you wish to tender your outstanding notes and your outstanding notes are not
immediately available or you cannot deliver your outstanding notes, the letter of
transmittal or any other required documents, or you cannot comply with the
applicable procedures under DTC's Automated Tender Offer Program for transfer of
book-entry interests, prior to the expiration date, you must tender your outstanding
notes according to the guaranteed delivery procedures set forth in this prospectus
under "The Exchange Offer--Guaranteed Delivery Procedures."
Effect on Holders of Outstanding Notes .................... As a result of the making of, and upon acceptance for exchange of, all validly tendered
outstanding notes pursuant to the terms of the exchange offer, the Issuer and the
guarantors will have fulfilled a covenant under the registration rights agreement.
Accordingly, there will be no increase in the interest rate on the outstanding notes
under the circumstances described in the registration rights agreement. If you do not
tender your outstanding notes in the exchange offer, you will continue to be entitled
to all the rights and limitations applicable to the outstanding notes as set forth in the
indenture; however, as a result of the making of, and upon acceptance for exchange
of, all validly tendered outstanding notes pursuant to the terms of the exchange offer,
the Issuer and the guarantors will not have any further obligation to you to provide
for the exchange and registration of the outstanding notes under the registration
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rights agreement. To the extent that the outstanding notes are tendered and accepted
in the exchange offer, the trading market for the remaining outstanding notes that are
not so tendered and exchanged could be adversely affected.
Consequences of Failure to Exchange ........................ All untendered outstanding notes will continue to be subject to the restrictions on
transfer set forth in the outstanding notes and in the indenture. In general, the
outstanding notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. Other than in connection with the
exchange offer, the Issuer and the guarantor do not currently anticipate that they will
register the outstanding notes under the Securities Act.
Certain U.S. Federal Income Tax Considerations ...... The exchange of outstanding notes for exchange notes in the exchange offer will not
constitute a taxable event to holders for U.S. federal income tax purposes. See
"Certain U.S. Federal Income Tax Considerations."
6
Use of Proceeds .......................................................... The Issuer will not receive any cash proceeds from the issuance of the exchange notes
in the exchange offer. See "Use of Proceeds."
Exchange Agent .......................................................... Wilmington Trust, National Association is the exchange agent for the exchange offer.
The addresses and telephone numbers of the exchange agent are set forth in the
section captioned "The Exchange Offer--Exchange Agent" of this prospectus.
7
Summary Historical Financial Data
We derived the summary statement of operations data and the summary statement of cash flows data for the years ended December 31,
2018, 2017 and 2016 and the summary balance sheet data as of December 31, 2018 and 2017 from our audited consolidated financial
statements included elsewhere in this prospectus. We derived the summary balance sheet data as of December 31, 2016 from audited
consolidated financial statements that are not included in this prospectus and have been restated to reflect the adoption of Accounting
Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09") using the full
retrospective approach as of January 1, 2016. We derived the summary statement of operations data and the summary statement of cash
flows data for the six months ended June 30, 2019 and 2018 and the summary balance sheet data as of June 30, 2019 from our unaudited
condensed consolidated financial statements included elsewhere in this prospectus. We derived the summary balance sheet data as of June
30, 2018 from our unaudited condensed consolidated financial statements that are not included in this prospectus.
We have prepared our unaudited condensed consolidated financial statements on the same basis as our audited consolidated financial
statements. In our opinion, these unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring
items, considered necessary for a fair presentation of the interim periods. The results for any interim period are not necessarily indicative of
the results that may be expected for the full year. Additionally, our historical results are not necessarily indicative of the results expected for
any future period.
You should read the summary historical financial data below, together with the consolidated financial statements and related notes
thereto appearing elsewhere in this prospectus, as well as the information under "Selected Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Description of Other Indebtedness" and the other financial information
included elsewhere in this prospectus.
Six Months Ended June 30,

Year Ended December 31,

2019

2018

2018

2017

2016

(in millions, except per share data)
Summary Statement of Operations Data:

Revenues

Franchise and licensing fees
$
826 $
735 $
1,530 $
1,321 $
1,091
Base and other management fees
169
161
321
324
230
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