Zacks_Analysts' Blog : Choice Hotels Offers Senior Notes - Analyst Blog

Choice Hotels International Inc (CHH), a hotel franchisor worldwide, announced its offer of $250 million senior notes, which have an interest rate of 5.7% and will mature in 10 years. The offering is expected to close by August 25, 2010.



Silver Spring, Maryland based company plans to use the sale proceeds of bonds to lessen its debt burden under its unsecured revolving credit facility. Choice Hotels International has no intention to make any corresponding reduction in its credit facility in the future.



Choice Hotels International has made the offer through Wells Fargo Securities LLC, a part of Wells Fargo & Company (WFC), Banc of America Securities LLC, a part of Bank of America Corporation (BAC), Goldman, Sachs & Co., a part of Goldman Sachs Group Inc (GS) J.P. Morgan Securities Inc., a

part of JPMorgan Chase & Co. (JPM) and SunTrust Robinson Humphrey Inc, a part of SunTrust Banks, Inc (STI).



The long-term debt of the company as of June 30, 2010 was $33.3 million, down from $35.0 million as of December 31, 2009. As of June 30, 2010, Choice Hotels International had $291.1 million of revolving loans outstanding, which will mature on June 16, 2011. The new offering would enhance the

amount of fund available to the company and extend the maturity period of debt.



Choice Hotels International currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.



Choice Hotels International's primary competitors are Wyndham Worldwide Corporation (WYN) and Home Inns & Hotel Management Inc (HMIN). We have a Zacks #1 Rank (short-term Strong Buy recommendation) on both the shares



Founded in 1981, Choice Hotels International has franchised more than 6,074 hotels, while 683 hotels remain under construction, or have been approved for development as of June 30, 2010.