Starwood 2003 Annual Report Download - page 98

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
of LIBOR ° 1.625%. The proceeds of the new Senior Credit Facility were used to pay oÅ all amounts owed
under the Company's previous senior credit facility, which was due to mature in February 2003. The Company
incurred a charge of approximately $1 million in connection with this early extinguishment of debt.
In April 2002, the Company sold $1.5 billion of senior notes in two tranches Ì $700 million principal
amount of 7
3
/
8
% senior notes due 2007 and $800 million principal amount of 7
7
/
8
% senior notes due 2012. The
Company used the proceeds to repay all of its senior secured notes facility and a portion of its previous senior
credit facility. In connection with the repayment of debt, the Company incurred charges of approximately
$29 million including approximately $23 million for the early termination of interest rate swap agreements
associated with the repaid debt, and $6 million for the write-oÅ of deferred Ñnancing costs and termination
fees for the early extinguishment of debt.
In December 2001, the Company entered into an 18-month 450 million Euro loan that automatically
extended for six additional months until December 2003. The loan had an interest rate of Euribor plus 195
basis points. In connection with the sale of the Sardinia Assets and the Principe, the Euro loan was paid in full
during 2003.
In May 2001, the Company sold an aggregate face amount of $816 million zero coupon Convertible
Senior Notes due 2021. The two series of notes had an initial blended yield to maturity of 2.35%. The notes are
convertible, subject to certain conditions, into an aggregate 9,657,000 Shares. The Company received gross
proceeds from these sales of approximately $500 million, which were used to repay a portion of its senior
secured notes facility that bore interest at LIBOR plus 275 basis points. The Company incurred approximately
$9 million of charges in connection with this early debt extinguishment. In May 2002, the Company
repurchased all of the outstanding Series A Convertible Senior Notes for $202 million in cash. Holders of
Series B Convertible Senior Notes may Ñrst put these notes to the Company in May 2004 for a purchase price
of approximately $330 million. The Company has classiÑed this debt maturity as long-term as it has the intent
and ability to draw on its Revolving Credit Facility for such funding, if required.
The Company has the ability to draw down on its Revolving Credit Facility in various currencies.
Drawdowns in currencies other than the U.S. dollar represent a natural hedge of the Company's foreign
denominated net assets and operations. At December 31, 2003, the Company had $15 million drawn in
Canadian dollars.
The Senior Credit Facility, Senior Notes, Convertible Senior Notes and the Convertible Debt are
guaranteed by the Sheraton Holding Corporation, a wholly owned subsidiary of the Corporation. The Sheraton
Holding public debt is guaranteed by the Corporation. See Note 23. Guarantor Subsidiary for consolidating
Ñnancial information for Starwood Hotels & Resorts Worldwide, Inc. (the ""Parent''), Sheraton Holding
Corporation (the ""Guarantor Subsidiary'') and all other legal entities that are consolidated into the
Company's results including the Trust, but which are not the Guarantor Subsidiary (the ""Non-Guarantor
Subsidiaries'').
The Company maintains lines of credit under which bank loans and other short-term debt are drawn. In
addition, smaller credit lines are maintained by the Company's foreign subsidiaries. The Company had
approximately $900 million of available borrowing capacity under its domestic and foreign lines of credit as of
December 31, 2003.
The Company is subject to certain restrictive debt covenants under its short-term borrowing and long-
term debt obligations including deÑned Ñnancial covenants, limitations on incurring additional debt, escrow
account funding requirements for debt service, capital expenditures, tax payments and insurance premiums,
among other restrictions. The Company was in compliance with all of the short-term and long-term debt
covenants at December 31, 2003.
F-32