Blackstone-backed La Quinta files $100M IPO

La Quinta Holdings Inc, the hotel chain backed by Blackstone Group, has filed with U.S. regulators to raise up to $100 million in an initial public offering of its common stock.

According to NASDAQ, the deal size is likely just a placeholder, and the company could raise at least $200 million.

Blackstone last took Hilton Worldwide public in the biggest-ever hotel IPO in December. Extended Stay America, another Blackstone-owned company, went on the public market in November 2013

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Before the IPO announcement, Blackstone explored other options for La Quinta, which it took private in a $3.4 billion deal in 2006. Reports are that the hotel operator will raise the proceeds to repay debt.

La Quinta operates more than 830 hotels with around 84,000 rooms. The operations are a mix of company-owned and franchised hotels.

The filing, underwritten by J.P. Morgan and Morgan Stanley, did not reveal how many shares La Quinta planned to sell or which stock exchange it intends to apply for listing.

The listing comes at a propitious time for the company, as the hotel industry continues to speed along at a healthy pace. The deal will not have a real effect on the industry, besides allowing the public to invest in the midscale hotel operator. La Quinta properties will continue to trade per usual.

One note about the IPO, reported by Bloomberg and listed in the filing, is that La Quinta is currently being audited by the Internal Revenue Service for 2010 and 2011, and may be required to pay additional taxes for those years. The IRS gave notice of a proposed adjustment of $158 million for those years as of January 9.

The IRS has said the rents charged to units for hotel leases exceeded arm’s-length rates, according to the filing. La Quinta said the rent payable under such lease is based on a study prepared by an expert firm, and that all such rent has been on an arm’s length basis.

La Quinta initially filed confidentially on December 23, 2013.


 

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