Moody's Investors Service has lowered its senior unsecured debt ratings on the notes of MeriStar Hospitality Operating Partnership LP from B2 to B3.The rating agency also confirmed the ratings of MeriStar Hospitality Corp.'s senior subordinate debt at Caa1. The outlook is stable. MeriStar Hospitality Corp., a hotel real estate investment trust based in Bethesda, Md., has been acquired by affiliates of The Blackstone Group, an investment and advisory firm. Moody's said the lower ratings reflect "significant use of secured debt and the considerably diminished claim of the unsecured debt holders in the new capital structure. In addition, unencumbered assets are practically nonexistent." Moody's said that, as a result of a tender and consent offer, most restrictive covenants pertaining to the notes have been removed. Moreover, Moody's said it expects "considerably less transparency" with respect to the firm's finances and operations given that it has been acquired by, and merged into entities controlled by, Blackstone, a private entity.
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May 10