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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 6, 2002
Host Marriott Corporation
(Exact Name of Registrant as Specified in Charter)
Maryland 001-05664 53-0085950
(State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification
Incorporation) No.)
10400 Fernwood Road
Bethesda, Maryland 20817
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (301) 380-9000
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Item 5. Other Events.
General
On June 6, 2002, Host Marriott, L.P. (the "Operating Partnership"), of which we
are the sole general partner, entered into a new bank credit facility with
Deutsche Bank Trust Company Americas, as Administrative Agent, Bank of America,
N.A., as Syndication Agent, Wells Fargo Bank, N.A., Citicorp Real Estate, Inc.,
and Credit Lyonnais New York Branch, as Co-Documentation Agents and certain
other agents and lenders. The new bank credit facility provides an aggregate
revolving loan commitment amount of up to $400 million ($300 million of which is
available initially, with up to an additional $100 million becoming available to
the extent that the Operating Partnership's leverage ratio falls below certain
specified levels). The new bank credit facility also includes subcommitments for
the issuance of letters of credit and loans to certain of the Operating
Partnership's Canadian subsidiaries in Canadian Dollars, in each case in an
amount of up to $100 million. The new bank credit facility replaces the prior
bank facility, which was terminated in connection with the closing under the new
bank credit facility. The new bank credit facility has an initial scheduled
maturity in June 2005. The Operating Partnership has an option to extend the
maturity for an additional year if certain conditions are met at the time of the
initial scheduled maturity.
As with the prior facility, the debt under the new bank credit facility is
guaranteed by certain of the Operating Partnership's existing subsidiaries and
is currently secured by pledges of equity interests in many of the Operating
Partnership's subsidiaries. The guarantees and pledges ratably benefit the
Operating Partnership's new credit facility and the notes outstanding under the
Operating Partnership's senior note indenture. Unlike the prior facility, all or
a portion of the pledges are permitted to be released in the event that the
Operating Partnership's leverage ratio falls below a certain level for two
consecutive fiscal quarters.
The Operating Partnership has not made any drawings under the new bank credit
facility.
Interest and Fees
The Operating Partnership pays interest on borrowings under the new bank credit
facility at a rate that is set with reference to the Operating Partnership's
leverage ratio. To the extent that amounts under the new bank credit facility
remain unused, the Operating Partnership pays a quarterly commitment fee on the
unused portion of the available loan commitment.
Financial and Other Covenants
The Operating Partnership's new bank credit facility establishes financial
covenants for leverage, interest coverage, fixed charge coverage and unsecured
interest coverage. While such financial covenants are similar to the financial
covenants contained in the prior facility, the new bank credit facility contains
fewer financial covenants and the covenant levels are generally less stringent
than those that would have been applicable during comparable time periods under
the prior facility.
The Operating Partnership's new bank credit facility does impose restrictions on
many of the customary matters that were restricted in the prior facility. In
general, however, the new bank credit facility is less restrictive in that it
imposes fewer limitations on, among other things, the Operating Partnership's
ability to: incur additional indebtedness; grant liens on assets; enter into
affiliate transactions; pay dividends; and make acquisitions, investments and
certain capital expenditures. In many cases, the Operating Partnership has
modified covenants to reflect the requirements under the Operating Partnership's
senior note indenture. Among the specific changes under the new bank credit
facility are the following:
.. proceeds from insurance, the incurrence of indebtedness, and the issuance of
equity are no longer required to be applied to repay credit facility borrowings
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.. proceeds from the sale of assets are required to be applied to repay credit
facility borrowings only under circumstances where repayment would be
required under the senior note indenture, and not in most other
circumstances as was the case under the third amendment to the prior
facility
.. restrictions on capital expenditures and investments in subsidiaries that
are not guarantors are reduced to the extent that the Operating
Partnership's leverage ratio falls below a certain level
.. acquisitions of new hotel properties are generally unrestricted
.. restrictions on the payment of dividends and the repurchase of stock are no
longer tied to the Operating Partnership's leverage ratio being below a
specified level, and are more consistent with the senior note indenture
In addition, the new bank credit facility reflects restrictions on incurrence of
debt and the payment of dividends that are generally consistent with the senior
note indenture. These provisions, under certain circumstances, limit debt
incurrence to that incurred under a credit facility or in connection with a
refinancing, and limit dividend payments to those necessary to maintain our tax
status as a REIT. As a result of the effect on our business of the September 11
terrorist attacks and the recession, we expect that the Operating Partnership
may be subject to these limitations beginning in the third quarter. Based on our
estimates of taxable income for 2002, we expect the Operating Partnership to
continue to pay the normal quarterly distributions on its preferred units as
well as re-institute a modest dividend on its common units later this year.
* * *
Forward-looking Statements
Certain matters discussed herein are forward-looking statements. We have based
these forward-looking statements on our current expectations and projections
about future events. We identify forward-looking statements in this report on
Form 8-K by using words or phrases such as "believe," "expect," "may be,"
"intend," "predict," "project," "plan," "objective," "will be," "should,"
"estimate," or "anticipate," or the negative thereof or other variations thereof
or comparable terminology. All forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our actual
transactions, results, performance or achievements to be materially different
from any future transactions, results, performance or achievements expressed or
implied by such forward-looking statements. Although we believe the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, we can give no assurance that we will attain these expectations or
that any deviations will not be material. Except as otherwise required by the
federal securities laws, we disclaim any obligations or undertaking to publicly
release any updates or revisions to any forward-looking statement contained in
this report on Form 8-K to reflect any change in our expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
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Exhibit No. Description
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10.38 Credit Agreement, dated as of June 6, 2002, among Host
Marriott, L.P., Certain Canadian Subsidiaries of Host
Marriott, L.P., Deutsche Bank Trust Company Americas, Bank
of America, N.A., Citicorp Real Estate, Inc., Credit
Lyonnais New York Branch, Wells Fargo Bank, N.A. and Various
Lenders (incorporated herein by reference to Exhibit 10.37
to Host Marriott, L.P.'s Current Report on Form 8-K filed
with the Commission on June 14, 2002).
10.39 Pledge and Security Agreement, dated as of June 6, 2002,
among Host Marriott, L.P. and the other Pledgors named
therein and Deutsche Bank Trust Company Americas, as
Pledgee (incorporated herein by reference to Exhibit 10.38
to Host Marriott, L.P.'s Current Report on Form 8-K filed
with the Commission on June 14, 2002).
10.40 Subsidiaries Guaranty, dated as of June 6, 2002, by the
subsidiaries of Host Marriott, L.P. named as Guarantors
therein (incorporated herein by reference to Exhibit 10.39
to Host Marriott, L.P.'s Current Report on Form 8-K filed
with the Commission on June 14, 2002).
99.1 Press Release dated June 14, 2002
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOST MARRIOTT CORPORATION
By: /s/Robert E. Parsons, Jr.
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Date: June 14, 2002 Name: Robert E. Parsons, Jr.
Title: Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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10.38 Credit Agreement, dated as of June 6, 2002, among Host
Marriott, L.P., Certain Canadian Subsidiaries of Host
Marriott, L.P., Deutsche Bank Trust Company Americas, Bank
of America, N.A., Citicorp Real Estate, Inc., Credit
Lyonnais New York Branch, Wells Fargo Bank, N.A. and Various
Lenders (incorporated herein by reference to Exhibit 10.37
to Host Marriott, L.P.'s Current Report on Form 8-K filed
with the Commission on June 14, 2002).
10.39 Pledge and Security Agreement, dated as of June 6, 2002,
among Host Marriott, L.P. and the other Pledgors named
therein and Deutsche Bank Trust Company Americas, as
Pledgee (incorporated herein by reference to Exhibit 10.38
to Host Marriott's Current Report on Form 8-K filed with
the Commission on June 14, 2002).
10.40 Subsidiaries Guaranty, dated as of June 6, 2002, by the
subsidiaries of Host Marriott, L.P. named as Guarantors
therein (incorporated herein by reference to Exhibit 10.39 to
Host Marriott, L.P.'s Current Report on Form 8-K filed with
the Commission on June 14, 2002).
99.1 Press Release dated June 14, 2002
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