Blackstone-backed La Quinta files for US IPO
JPMorgan Chase, Morgan Stanley are managing the issue
[NEW YORK] La Quinta Holdings Inc, the Blackstone Group LP-backed midpriced hotel chain, has filed to raise US$100 million in an initial public offering in the US.
The figure is a placeholder used to calculate fees and may change. JPMorgan Chase & Co and Morgan Stanley are managing the offering, according to a regulatory filing on Monday with the US Securities and Exchange Commission. La Quinta didn't specify the number of shares being sold or a price range.
Blackstone has taken hotel companies Hilton Worldwide Holdings Inc and Extended Stay America Inc public, both of which have increased since their debuts late last year. La Quinta, based in Irving, Texas, said in December that it had filed a prospectus confidentially under the Jumpstart Our Business Startups Act.
Blackstone acquired La Quinta in January 2006 for about US$3 billion, according to company statements. The New York-based private-equity firm explored a sale of the company before opting instead for an IPO, people with knowledge of the matter said in November. La Quinta operates and franchises more than 800 hotels in the US, Canada and Mexico, according to its website. Proceeds from the IPO will be used to repay debt, according to the prospectus.
Hilton, the world's biggest hotel operator, has climbed 7.1 per cent since its Dec 11 debut, while Extended Stay, a mid-priced lodging chain, has surged 28 per cent from its IPO on Nov 12.
La Quinta, which posted revenue of US$818 million in 2012, is being audited by the Internal Revenue Service (IRS) for 2010 and 2011, according to Monday's filing, and may be required to pay additional taxes for those years. The IRS gave notice of a proposed adjustment of US$158 million as of Jan 9, the filing shows.
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. The company said it expects its tax returns under audit to be sustained upon examination.
As of Sept 30, La Quinta hadn't established any reserves related to the proposed adjustment "or any other issues reflected on the returns under examination", according to the filing. - Bloomberg
