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Choice Hotels (NYSE: CHH) adds $500M loan with leverage limits

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Choice Hotels International, Inc. (CHH) disclosed that on August 28, 2026 it entered into a new $500 million senior unsecured term loan credit agreement with a syndicate of lenders, with Wells Fargo Bank, National Association as administrative agent. The Term Loan matures on August 28, 2029, with an optional one-year extension the company may request, subject to lender consent and customary conditions.

The Term Loan bears interest, at the company’s election, at SOFR plus 1.25% (with a 0.00% SOFR floor) or a base rate plus 0.25%. The agreement includes covenants restricting liens, additional indebtedness, dividends and stock repurchases, investments, and mergers or asset sales, and requires a minimum consolidated fixed charge coverage ratio of 2.5:1.0 and a maximum consolidated leverage ratio of 4.5:1.0 (temporarily 5.5:1.0 following certain material acquisitions). While the company maintains an Investment Grade Rating, it is not required to comply with the fixed charge coverage ratio covenant. Proceeds are expected to be used for general corporate purposes, including working capital and debt repayment.

Positive

  • $500 million senior unsecured term loan provides significant additional liquidity for general corporate purposes, including working capital and debt repayment, with a maturity out to August 28, 2029 and a potential one-year extension.

Negative

  • New $500 million Term Loan adds debt and introduces ongoing financial maintenance covenants, including a maximum consolidated leverage ratio of 4.5:1.0 (up to 5.5:1.0 after certain acquisitions), which could constrain future financial flexibility.

Filing Explained

The new credit agreement includes an acceleration mechanism: if a covered default occurs and any applicable cure period expires, lenders may require immediate payment of the term loan, accrued interest, and the company’s other obligations under the agreement.

Item 1.01 Entry into a Material Definitive Agreement Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Term Loan principal amount $500 million Senior unsecured Term Loan under new credit agreement entered August 28, 2026
Maturity date August 28, 2029 Scheduled maturity of the $500 million Term Loan
SOFR margin 1.25% Interest option at SOFR (0.00% floor) plus margin
Base rate margin 0.25% Alternative interest option at base rate plus margin
Consolidated fixed charge coverage ratio 2.5 to 1.0 Minimum maintenance covenant, subject to Investment Grade Rating relief
Consolidated leverage ratio 4.5 to 1.0 Maximum maintenance covenant, with step-up to 5.5 to 1.0 after certain acquisitions
Leverage ratio step-up 5.5 to 1.0 Permitted on up to two nonconsecutive occasions for up to four quarters after material acquisitions
Term Loan financial
"provides for a $500 million unsecured term loan (the “Term Loan”)"
A term loan is a type of loan that is borrowed for a set period of time, with a fixed schedule for repaying the money, usually in regular payments. It matters to investors because it represents a company's borrowing costs and financial stability; reliable repayment of these loans can indicate strong financial health, while difficulties may signal potential risks.
SOFR financial
"bear interest at a rate equal to (i) SOFR (subject to a 0.00% floor)"
The Secured Overnight Financing Rate (SOFR) is a market benchmark that measures the cost of borrowing cash overnight using U.S. Treasury securities as collateral. Investors watch SOFR because it acts like a speedometer for short-term interest costs—affecting loan rates, bond yields and the pricing of interest-rate contracts—so movements change borrowing expenses, cash returns and the value of interest-sensitive investments.
consolidated fixed charge coverage ratio financial
"maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0"
consolidated leverage ratio financial
"and a consolidated leverage ratio of not more than 4.5 to 1.0"
A consolidated leverage ratio measures a business group's total debt compared with its ability to pay, by using combined figures for the parent company and its subsidiaries. Think of it like comparing the total mortgage across all properties you own to your overall income or net worth; investors use it to judge how risky the company’s capital structure is and how vulnerable it may be to rising interest rates or income drops.
Investment Grade Rating financial
"So long as the Company maintains an Investment Grade Rating, as defined"
An investment grade rating is a score assigned by a credit-rating agency indicating that a bond issuer or debt is considered reasonably safe and likely to repay its obligations. Investors treat it like a safety label—similar to a product receiving a good quality seal—because higher ratings mean lower risk of default, usually lower borrowing costs for the issuer, and greater appeal to conservative investors and large funds.
events of default financial
"includes customary events of default, the occurrence of which, following"
Events of default are specific breaches or failures listed in a loan, bond, or credit agreement that give lenders the right to act, such as demanding immediate repayment, raising interest rates, or taking secured assets. They matter to investors because triggering one is like setting off a financial alarm: it raises the chance of foreclosure, restructuring, or bankruptcy and can sharply reduce the value of a company’s stock or bonds and increase borrowing costs.

FAQ

What new financing did CHH enter into on August 28, 2026?
Choice Hotels International, Inc. entered into a $500 million senior unsecured Term Loan credit agreement maturing on August 28, 2029, with an optional one-year extension subject to lender consent and customary conditions.

What are the interest rate terms on CHH’s new $500 million Term Loan?
The Term Loan bears interest, at CHH’s election, at SOFR plus 1.25% (with a 0.00% SOFR floor) or at a base rate plus 0.25%, as provided under the credit agreement.

What financial covenants apply under CHH’s new credit agreement (CHH)?
The agreement requires a minimum consolidated fixed charge coverage ratio of 2.5:1.0 and a maximum consolidated leverage ratio of 4.5:1.0, which may increase to 5.5:1.0 for up to four quarters following certain material acquisitions.

When is CHH exempt from the fixed charge coverage ratio covenant?
As long as Choice Hotels International, Inc. maintains an Investment Grade Rating, it is not required to comply with the consolidated fixed charge coverage ratio covenant under the credit agreement.

How does CHH expect to use the proceeds of the $500 million Term Loan?
CHH expects to use the Term Loan proceeds for general corporate purposes, including working capital, debt repayment and other permitted uses specified in the credit agreement.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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CHOICE HOTELS INTERNATIONAL INC /DE false 0001046311 0001046311 2026-08-28 2026-08-28
 
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 28, 2026

 

 

CHOICE HOTELS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-13393   52-1209792

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification Number)

 

915 Meeting Street  
Suite 600  
North Bethesda  
Maryland   20852
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (301) 592-5000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

  

Trading

Symbol(s)

  

Name of Each Exchange

on Which Registered

Common Stock, Par Value $0.01 per share   CHH   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 
 

Item 1.01

Entry into a Material Definitive Agreement.

See Item 2.03 below for a description of the $500 million senior unsecured credit agreement entered into on August 28, 2026 among Choice Hotels International, Inc. (the “Company”), Wells Fargo Bank, National Association, as administrative agent, the other agents party thereto and a syndicate of lenders (the “Credit Agreement”).

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On August 28, 2026, the Company entered into the Credit Agreement, which provides for a $500 million unsecured term loan (the “Term Loan”) with a scheduled maturity date of August 28, 2029, subject to an optional one-year extension that can be requested by the Company prior to the initial maturity date. The effectiveness of such extension is subject to the consent of the lenders under the Credit Agreement and certain customary conditions. The Term Loan and all accrued but unpaid interest thereon must be repaid in full on the maturity date.

The Credit Agreement provides that the Company may elect to have the Term Loan bear interest at a rate equal to (i) SOFR (subject to a 0.00% floor) plus a margin of 1.25% or (ii) a base rate plus a margin of 0.25%.

The Credit Agreement requires that the Company and its restricted subsidiaries comply with various covenants, including with respect to restrictions on liens, incurring indebtedness, making dividends and stock repurchases, making investments and effecting mergers and/or asset sales. The Credit Agreement imposes financial maintenance covenants requiring the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 and a consolidated leverage ratio of not more than 4.5 to 1.0, which may be increased to 5.5 to 1.0 on up to two nonconsecutive occasions for up to four consecutive fiscal quarters commencing with the fiscal quarter in which certain material acquisitions are consummated. So long as the Company maintains an Investment Grade Rating, as defined in the Credit Agreement, the Company will not need to comply with the consolidated fixed charge coverage ratio covenant.

The Credit Agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of the Company under the Credit Agreement to be immediately due and payable.

The proceeds of the Term Loan are expected to be used for general corporate purposes, including working capital, debt repayment and other permitted uses set forth in the Credit Agreement.

Certain of the lenders, as well as certain of their respective affiliates, have performed and may in the future perform for the Company and its subsidiaries, various commercial banking, investment banking, lending, underwriting, trust services, financial advisory and other financial services, for which they have received and may in the future receive customary fees and expenses.

The summary of the material provisions of the Credit Agreement set forth above is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed as Exhibit 10.1 to this report and incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

10.1    Senior Unsecured Credit Agreement, dated August 28, 2026, among Choice Hotels International, Inc., Wells Fargo Bank, National Association, as administrative agent, the other agents party thereto and a syndicate of lenders
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 28, 2026    

/s/ Jeff Lobb

            Jeff Lobb
            Senior Vice President, General Counsel & Secretary

Source: View Original Filing on SEC EDGAR

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