Sunburst Gets Jump On Debt Pay Down

SILVER SPRING, MD— HOTEL BUSINESS® has learned Sunburst Hospitality has become more liquid, paying down a significant amount of its debt incurred in January 2001 originally to fund management’s $370 million leveraged buyout of the company, and has also amended its bank credit facility. Sunburst reduced its bank credit facility from $280 million to $170 million, which includes an unused $20 million revolving line of credit. Early debt redemption via the planned sale of non-strategic assets and strong operating cash flow allowed the action. According to Sunburst CEO Jim MacCutcheon, the debt reduction will provide the company with a strong balance sheet and “will allow us to pursue judicious growth opportunities as we move ahead.” The paydown had been a key strategy for the company since the leveraged buyout. The bank credit facility reportedly was amended to lower the average interest rate by almost two percentage points, and its term extended one year to December 31, 2006. Participating financial institutions in the credit facility, led by JP Morgan, include SunTrust Bank, as the documentation agent and Fleet National Bank as the syndication agent.— Stefani C. O’Connor