Debt-laden Marriott gets new line of credit


To the delight of Wall Street, Marriott Corp. announced yesterday a new line of bank credit and a series of moves designed to strengthen the financial condition of the debt-laden hotel and restaurant company.

At the heart of the good news is a new $150 million line of credit Marriott negotiated with Bankers Trust Co., Citibank and Bank of Nova Scotia.

"We believe we have enough cash not only to cover our capital expenditures and interest coverage but also to begin to pay down the debt levelwe have," said Marriott spokesman Robert T. Souer.

The line of credit, which gives the company access to additional cash, "is a cushion," said Duff & Phelps analyst David Silver. "It gives them breathing room.

Encouraged by the latest steps in the company's year-old restructuring drive, investors flooded the New York Stock Exchange with buy orders for Marriott shares yesterday morning, prompting officials to delay opening of the stock by nearly an hour.

After opening with the sale of a 200,000-share block at $12 a share, the stock finished the day at $13, up $2.75.

The announcement came as Washington-based Marriott proceeds with its effort to leave the restaurant business. The company has arranged to sell 120 Bob's Big Boy restaurants on the West Coast to Restaurant Enterprises Group Inc. And Marriott has lined up buyers for 45 other restaurants, including 30 Wags restaurants and 11 Popeye's fried chicken franchises.

In addition, Marriott's plan to cease new construction of hotels and housing projects for the elderly originally scheduled for this year will result in a charge against fourth-quarter earnings of $80 million to $90 million, the company announced.

About 80 percent of that amount will be used to pay for employee severance packages, construction contract terminations and other fees associated with the moves, the company said.

Marriott laid off more than 1,000 workers during 1990 and probably will lay off 200 more by the end of this year.

Marriott's debt expense has been a burden, analysts said. The company has more than $3.5 billion in outstanding debt with annual interestpayments of about $300 million.

In addition, the company had been piling up additional debt rapidly to finance new construction. The capital-expenditure budget for 1990 was about $1.3 billion.

For 1991, the company announced yesterday, the previously planned capital budget has been slashed by $700 million, to less than $500 million.

The company said its operating cash flow of $600 million and a cash reserve of $250 million should cover those obligations and that the company probably won't have to tap into the new bank credit.

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