DiamondRock Hospitality Company Successfully Secures Financial Covenant Waivers For Credit Agreements
"DiamondRock has long-standing relationships with our valued banks, and we were able to reach a sensible agreement that recognizes what we believe to be the temporary dislocation to travel demand caused by the current pandemic," said
Key terms of the Credit Amendments include the following:
- Waiver of the existing quarterly-tested financial covenants beginning in second quarter of 2020 through the first quarter of 2021 (the "Covenant Relief Period"), unless terminated earlier by the Company.
- After the end of the Covenant Relief Period, certain quarterly-tested financial covenants are modified to make compliance easier through the fourth quarter of 2021.
- Imposition of certain restrictions during the Covenant Relief Period, including restrictions on share repurchases and dividend and distribution payments in excess of 100% of taxable net income and new covenants limiting the incurrence of additional indebtedness, asset sales, and discretionary capital expenditures (in each case subject to various exceptions) and requiring certain mandatory prepayments.
- During the Covenant Relief Period, acquisitions of encumbered hotels are permitted, subject to a
$300 millionlimitation, and acquisitions of unencumbered hotels are permitted subject to a partial repayment of the outstanding balance on the revolving credit facility or funded with junior capital.
About the Company
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," "plan" and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: national and local economic and business conditions, including the impact of COVID-19 on occupancy rates at the Company's hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the Company's indebtedness; relationships with property managers; the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; and other risk factors contained in the Company's filings with the
Jeff Donnelly, Chief Financial Officer, (240) 744-1190; Briony Quinn, Senior Vice President, (240) 744-1196