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Hilton turns to bonds to tackle debt

HOTELS group Hilton today became the latest London company to turn to the convertible bonds market for fresh funds as the firm launched a £300m debt offer.

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Holders of the debt, which will be priced today, will be able to convert the notes into shares at a premium of 30% to 35% above the current share price.

Hilton follows in to the convertible debt market for funds companies such as International Power, Xstrata and 3i - news of which was associated with a sharp slide in their shares.

Fears of potential dilution for existing shareholders initially took Hilton shares down 1 1/2p to 196 1/2p before they recovered to trade flat at 198p.

Barclays Capital, Deutsche bank and SG are leading the offer of the seven-year notes. Hilton said the bond, paying an annual rate of between 2.875% to 3.375%, allowed it to refinance part of its outstanding £1.56bn of debt.

The issue follows last week's downbeat results from the group, which owns several landmark hotels in London including its Park Lane flagship.



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