Report: Blackstone Considers Cutting Hilton Debt

(Reuters) – U.S. private equity firm Blackstone Group (BX.N) has opened discussions with lenders to slash up to $5 billion in debt held by its unit Hilton Hotels, the Wall Street Journal said, citing people familiar with the matter.

Blackstone is mulling injecting $800 million of fresh equity to buy back the debt at a discount, the paper said.

Blackstone’s $26 billion deal to buy Hilton was struck at the peak of the buyout bubble in July 2007 and was financed with $20.6 billion of debt and about $5.7 billion of equity. Since then, the hotel market has been hammered by the economic crisis as consumers and businesses have cut back on travel spending.

The paper said that Blackstone is also seeking to extend its debt maturity by 3 years to 2016, while converting some portion of its debt into equity.

The $800 million in additional equity would come from funds managed by Blackstone that already have invested in the deal, the paper said.

A Blackstone spokeswoman declined to comment to the paper.

Blackstone could not be immediately reached for a comment by Reuters outside of regular U.S. business hours. (Reporting by Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman)