Lenders take majority stake in Aimbridge

PLANO, Texas – The restructuring and repositioning of third-party management giant Aimbridge Hospitality took another turn on Thursday when it entered into a Restructuring Support Agreement (RSA) that would right-size the company’s capital structure by converting more than $1.1 billion in debt to equity, infuse $100 million in new capital, and make the first-lien lenders majority owners, taking over from Advent International, the majority owners since 2019.

Aimbridge stated that the RSA has 80% support from its first-lien lenders and full support from second-lien lenders and its existing sponsor. 

Aimbridge’s total debt outstanding would be significantly reduced to a maximum of $210 million at close from $1.3 billion today. This transaction would be facilitated by Aimbridge’s current first-lien lenders, which would provide a $100 million capital injection.

While sources close to the deal would not tell Hotel Investment Today the names of the first-lien lenders, in December Bloomberg reported that a group of lenders, including KKR & Co. and Capital Research and Management Co., were in talks to restructure the hotel management company's debt. The report said private negotiations came as Aimbridge’s need for cash intensified with a liquidity crunch dragging down the value of its loans.

Sourced did tell Hotel Investment Today that the lenders are sophisticated investors with proven track records in the hotel industry. They have been working closely with its leadership team, and strongly believe in the potential of the business and business strategy. As a result, this is expected to be a quick and efficient process with completion expected in the first quarter of 2025.

We have a clear strategy and execution plan in place – and with a strengthened balance sheet, we will be even better positioned to continue investing in our operational capabilities, winning new business in existing and new markets, and strengthening our leading position in the industry.

Craig Smith

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Throughout this process, Aimbridge, which reports to operate 1,000 hotels across all chain scales and 85-plus brands in 23 countries, said it will continue to operate its business as usual. Aimbridge stated that it has ample liquidity to support the seamless continuation of its operations and fulfill commitments to associates, hotel owners, brand partners, suppliers, and vendors. Specifically, it said associates will continue to receive salaries and benefits in the normal course, and all vendors and suppliers will be paid in the ordinary course of business.

Aimbridge’s executive leadership team will remain in place, with Steve Joyce continuing to serve as the chairman of the board, Craig Smith as CEO and Eric Jacobs as chief global growth officer, “with strong support from an independent board with significant hospitality and leadership experience.”

Aimbridge stated that the transaction would build on the lenders’ long-term commitment to the company and reflect their confidence in Aimbridge’s strong future and business strategy.

“We are excited to announce an agreement that will transform our balance sheet and put Aimbridge in an incredibly strong position to accelerate our long-term strategy and continue delivering top-of-the-line services to our hotel owners,” CEO Smith said. “Over the past year, we have been enhancing our differentiated service offerings, investing in top talent, and making strategic and operational improvements to drive hotel performance. We have a clear strategy and execution plan in place – and with a strengthened balance sheet, we will be even better positioned to continue investing in our operational capabilities, winning new business in existing and new markets, and strengthening our leading position in the industry.

“In taking this important step, we are pleased to have the strong support of our lenders, who share our excitement about the significant potential to enhance value for our stakeholders, and we appreciate the ongoing commitment of our associates and valued partners. We look forward to continuing to deliver operational excellence, best-in-class guest experiences, and innovative solutions to our hotel owners,” Smith concluded.

In June, Aimbridge talked to Hotel Investment Today about focusing on identifying its true north and what the company will stand for moving forward. Leadership said some of their bigger opportunities will come from international markets where developers will need an Aimbridge-like manager.