Hilton Worldwide Holdings Inc. announced its filing of Form 10 Registration Statements with the U.S. Securities and Exchange Commission (SEC) for its timeshare business and the bulk of its real estate business in connection with plans to pursue a separation into three distinct, publicly traded companies.
The filings provide detailed information on the business, strategy and historical financial results of both entities, as well as further details on license and management agreements between companies. The filings will be updated with additional information in subsequent amendments as further information on the transactions is finalized prior to separation, which is expected to be completed by end of year.
"The filing of the Form 10 Registration Statements is an important milestone in simplifying Hilton to a capital-light, fee-based business, while fully activating our real estate and timeshare businesses as stand-alone companies," said Christopher J. Nassetta, president & CEO of Hilton. “As a result of the proposed transactions, we expect to unlock growth opportunities that are embedded within the three businesses and take advantage of capital market and tax efficiencies.”
Spin-off companies include Park Hotels & Resorts, which is described as a “lodging real estate company with a diverse portfolio of iconic and market-leading hotels and resorts,” and Hilton Grand Vacations, described as “a rapidly growing timeshare company that markets and sells vacation ownership intervals, manages resorts in leisure and urban destinations, and operates a point-based vacation club.”
More Transaction Details
Under the plan announced in February 2016, Hilton will execute tax-free spin-offs to shareholders of its timeshare business, Hilton Grand Vacations, and the bulk of its real estate business, with the intention of electing real estate investment trust (REIT) status for Park concurrently with completion of the spin. Hilton’s core Management & Franchise business will continue operating under the Hilton name.
Hilton has received a private letter ruling from the Internal Revenue Service on certain issues relevant to the qualification of the spin-offs as tax-free. These transactions will be effected through a distribution of the new entities' stock to existing Hilton shareholders. Hilton shareholders will own shares in all three companies following the completion of the transaction.
One-time cash uses related to the transactions are expected to include approximately $200 million for the cash portion of a special dividend to be paid by Park following the spin-offs in connection with its election of REIT status, approximately $200 million for the acceleration of taxes associated with the cancellation of debt income, and approximately $250 million of estimated transaction costs.
Completion of the separations is subject to a number of conditions, including, among others, declaration of effectiveness of the Form 10 Registration Statements filed with the SEC, and other customary matters. Approval by Hilton's shareholders is not required for completion of the separation.
A copy of each registration statement is available at www.sec.gov under the name Hilton Grand Vacations Inc. for the timeshare business and Park Hotels & Resorts Inc. for the real estate business.
More information is also available on Hilton’s website at: ir.hiltonworldwide.com.
