Starwood 2004 Annual Report Download - page 98

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
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.
In May 2003, the Company sold an aggregate of $360 million 3.5% coupon convertible senior notes due
2023. The notes are convertible, subject to certain conditions, into 7.2 million Shares based on a conversion
price of $50.00 per Share (the ""Convertible Debt''). Gross proceeds received were used to repay a portion of
the Company's Senior Credit Facility and for other operational purposes. Holders may Ñrst present their
Convertible Debt to the Company for repurchase in May 2006.
During the second quarter of 2003, the Company amended its Senior Credit Facility. The amendment
adjusted the leverage coverage ratio for the second quarter of 2003 and for the next eight quarters (through
June 30, 2005). In addition, the Company modiÑed its current covenant on encumbered EBITDA (as
deÑned) and added a restriction on the level of cash dividends.
In October 2002, the Company reÑnanced its previous senior credit facility with a new four-year
$1.3 billion Senior Credit Facility. The new facility was comprised of a $1.0 billion Revolving Credit Facility
and a $300 million Term Loan (later increased to $600 million as discussed earlier), each maturing in 2006,
with a one-year extension option. 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
(collectively, the ""Senior Notes''). 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.
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, 2004, the Company had $11 million drawn in
Canadian dollars.
The Senior Credit Facility, 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 22. 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 $967 million of available borrowing capacity under its domestic and foreign lines of credit as of
December 31, 2004.
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, 2004.
F-32