Hilton Hotels Corporation Commences Cash Tender Offers and Related Consent Solicitations for $1.8 Billion of Its Outstanding Debt Securities

BEVERLY HILLS, Calif.--(BUSINESS WIRE)--Hilton Hotels Corporation (NYSE:HLT) (“Hilton”) announced today that it has commenced cash tender offers in respect of an aggregate of approximately $1.8 billion of its outstanding unsecured debt securities, which we refer to as the “Securities.” The Securities comprise the notes identified in the first table below (the “Notes”), the 8.000% Quarterly Interest Bonds due 2031 (the “Bonds”) and the 7.430% Chilean Inflation-Indexed (UF) Notes due 2009 (the “CLP Notes”), in each case issued by Hilton. The tender offer for each series of Securities is being conducted concurrently with a related consent solicitation to amend the terms of such Securities and the indenture pursuant to which the Securities were issued (the “Indenture”). The tender offers and consent solicitations are being conducted in connection with the previously announced merger agreement that provides for the acquisition of Hilton by BH Hotels LLC, an entity controlled by investment funds affiliated with The Blackstone Group L.P. (such transaction referred to herein as the “Merger”). The completion of the tender offers and consent solicitations is not a condition to completion of the Merger.

The offer for each issue of Securities will expire at 8:00 a.m., New York City time, on October 11, 2007, unless extended or earlier terminated by Hilton (the “Offer Expiration Date”). Holders who wish to receive the total consideration for the Securities referred to below must validly tender and not validly withdraw their Securities at or prior to 5:00 p.m., New York City time, on September 25, 2007, unless extended or earlier terminated (the “Consent Payment Deadline”).

Holders tendering their Securities will be required to consent to proposed amendments to the Securities, the Indenture and the related officers’ certificates, which would eliminate substantially all of the restrictive covenants contained in the Securities, the Indenture and the related officers’ certificates, eliminate certain events of default, modify or eliminate covenants regarding consolidations, mergers and sale of assets and company reports and modify or eliminate certain other provisions, including, without limitation, certain provisions relating to defeasance contained in the Securities, the Indenture and the related officers’ certificates. Holders may not tender their Securities without also delivering consents and may not deliver consents without also tendering their Securities.

The total consideration for each $1,000 principal amount of Notes validly tendered and not validly withdrawn pursuant to each tender offer is the price (calculated as described in the Offer to Purchase referred to below) equal to (i) the sum of (a) the present value, determined in accordance with standard market practice, on the Scheduled Payment Date (as defined in the Offer to Purchase referred to below) of $1,000 on the applicable maturity date for the Notes specified in the table below plus (b) the present value on the Scheduled Payment Date of the interest that would be payable on, or accrue from, the last interest payment date prior to the Scheduled Payment Date until the applicable maturity date for such Notes, in each case determined on the basis of a yield to such maturity date equal to the sum of (A) the yield to maturity on the applicable benchmark security specified in the table below, as calculated by Bear, Stearns & Co. Inc. in accordance with standard market practice, based on the bid-side price of such reference security as of 11:00 a.m., New York City time, on October 5, 2007, unless modified by Hilton in its sole discretion, as displayed on the page of the Bloomberg Government Pricing Monitor specified in the table below plus (B) the Applicable Spread (as shown in the table below), minus (ii) accrued and unpaid interest to, but not including, the Scheduled Payment Date.

The total consideration for each $25.00 principal amount of Bonds validly tendered and not validly withdrawn pursuant to the tender offer for the Bonds is $25.125.

The total consideration for each CLP50,000 original principal amount of CLP Notes validly tendered and not validly withdrawn pursuant to the tender offer for the CLP Notes is $119.53. The total consideration for each CLP50,000 original principal amount of CLP Notes represents a price of approximately $1,028.72 per $1,000 Adjusted Principal Amount (as defined in the CLP Notes), converted at the Observed Exchange Rate (as defined in the CLP Notes) on September 11, 2007. The foregoing translation is solely for the convenience of the holders of CLP Notes; the CLP Notes Total Consideration is fixed and will not be adjusted for exchange rate movements or changes in the Adjusted Principal Amount during the pendency of the Offer for such CLP Notes.

The total consideration for the Securities described above includes a consent payment of $30.00 per $1,000 principal amount of Notes, $1.00 per $25.00 principal amount of Bonds and $3.00 per CLP50,000 original principal amount of CLP Notes. Subject to the terms and conditions of the tender offers and the consent solicitations, the consent payment will be made on the payment date in respect of Securities validly tendered and not validly withdrawn and as to which consents to the proposed amendments are delivered at or prior to the Consent Payment Deadline. Holders of the Securities must validly tender and not validly withdraw Securities at or prior to the Consent Payment Deadline in order to be eligible to receive the applicable total consideration (which includes the applicable consent payment described in the foregoing sentence) for such Securities purchased in the tender offers. Holders who validly tender their Securities after the Consent Payment Deadline and at or prior to the Offer Expiration Date will be eligible to receive the tender offer consideration which is an amount, paid in cash, equal to the applicable total consideration less the applicable consent payment.

In each case, holders whose Securities are accepted for payment in the tender offers will receive accrued and unpaid interest in respect of such purchased Securities from the last interest payment date preceding the payment date to, but not including, such payment date.

The following table summarizes the material terms of the tender offers for the Notes:

CUSIP No.

Principal Amount Outstanding

Security Description

Maturity Date

Applicable Spread

Reference Security

Applicable Bloomberg Page

432848AU3

$400,000,000

7.625% Notes due 2008

May 15, 2008

+50 bps

3.750% UST due 05/15/08

PX3

432848AR0

$200,000,000

7.200% Notes due 2009

December 15, 2009

+50 bps

3.500% UST due 12/15/09

PX5

432848AT6

$300,000,000

8.250% Notes due 2011

February 15, 2011

+50 bps

5.000% UST due 2/15/11

PX5

432848AX7

$375,000,000

7.625% Notes due 2012

December 1, 2012

+50 bps

4.000% UST due 11/15/12

PX6

432848AS8

$200,000,000

7.500% Notes due 2017

December 15, 2017

+50 bps

8.875% UST due 08/15/17

PX6

The following table summarizes the material terms of the tender offer for the Bonds:

CUSIP No.	Principal Amount Outstanding	Security Description	Maturity Date	Bonds Total Consideration	Consent Payment
432848307	$200,000,000	8.000% Quarterly Interest Bonds due 2031	August 15, 2031	$25.125 Per $25.00 Principal Amount	$1.00 Per $25.00 Principal Amount

The following table summarizes the material terms of the tender offer for the CLP Notes:

CUSIP No.	Original Principal Amount Outstanding	Security Description	Maturity Date	CLP Notes Total Consideration	Consent Payment
U43284AA3	CLP 67,715,000,000	7.430% Chilean Inflation-Indexed (UF) Notes due 2009	August 15, 2009	$119.53 Per CLP50,000 Original Principal Amount	$3.00 Per CLP50,000 Original Principal Amount

Each tender offer and consent solicitation is being made independently of the other tender offers and consent solicitations and Hilton reserves the right to terminate, withdraw or amend each tender offer and consent solicitation independently of the other tender offers and consent solicitations at any time and from time to time.

The tender offers and consent solicitations relating to the Securities are made upon the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated September 12, 2007 (the “Offer to Purchase”), and the related Consent and Letter of Transmittal. The tender offers and consent solicitations are subject to the satisfaction of certain conditions, including receipt of consents sufficient to approve the proposed amendments and the Merger having occurred, or such Merger occurring substantially concurrent with the Offer Expiration Date. Further details about the terms and conditions of the tender offers and the consent solicitations are set forth in the Offer to Purchase.

Hilton has retained Bear, Stearns & Co. Inc. and UBS Investment Bank to act as the lead Dealer Managers for the tender offers and lead Solicitation Agents for the consent solicitations, and they can be contacted at (877) 696-BEAR (toll-free) ((212) 272-5112 (collect)) and (888) 719-4210 (toll-free) ((203) 719-4210 (collect)), respectively. Banc of America Securities LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated are also acting as Dealer Managers and Solicitation Agents in connection with the tender offers and the consent solicitations. The Offer to Purchase and other documents relating to the tender offers and consent solicitations are expected to be distributed to holders beginning today. Requests for documentation may be directed to Global Bondholder Services Corporation, the Information Agent, which can be contacted at (212) 430-3774 (for banks and brokers only) or (866) 924-2200 (for all others toll-free).

This release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell the Securities. The offer to buy the Securities is only being made pursuant to the tender offer and consent solicitation documents, including the Offer to Purchase that Hilton is distributing to holders of Securities. The tender offers and consent solicitations are not being made to holders of Securities in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction in which the securities laws or blue sky laws require the tender offers and consent solicitations to be made by a licensed broker or dealer, the tender offers and consent solicitations will be deemed to be made on behalf of Hilton by the Dealer Managers, or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction.

About Hilton Hotels Corporation

Hilton Hotels Corporation (NYSE:HLT) is the leading global hospitality company, with 2,896 properties totaling approximately 490,000 rooms in 76 countries and territories.

The company owns, manages or franchises a hotel portfolio of some of the best known and highly regarded brands, including Hilton®, Conrad® Hotels & Resorts, Doubletree®, Embassy Suites Hotels®, Hampton Inn®, Hampton Inn & Suites®, Hilton Garden Inn®, Hilton Grand Vacations^TM, Homewood Suites by Hilton® and The Waldorf=Astoria Collection®.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of federal securities law, including statements concerning the proposed transaction with Blackstone, which are subject to various risks and uncertainties. Discussion of risks and uncertainties that could cause actual results to differ materially from management’s current projections, forecasts, estimates and expectations is contained in Hilton’s filings with the Securities and Exchange Commission (SEC). Specifically, Hilton makes reference to the section entitled “Risk Factors” in its annual and quarterly reports. In addition to the risks and uncertainties set forth in the Hilton SEC reports or periodic reports, the proposed transaction with Blackstone described in this release could be affected by, among other things, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the outcome of any legal proceedings that may be instituted against Hilton and others related to the merger agreement; failure to obtain stockholder approval or any other failure to satisfy other conditions required to complete the merger, including required regulatory approvals; risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; the failure to obtain the necessary debt financing arrangements set forth in a commitment letter received in connection with the merger; the amount of the costs, fees, expenses and charges related to the merger and the actual terms of certain financings that will be obtained for the merger; and the impact of the substantial indebtedness incurred to finance the consummation of the merger. Many of the factors that will determine the outcome of the subject matter of this press release are beyond Hilton’s ability to control or predict.

Hilton undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information and Where to Find It

In connection with the proposed transaction, Hilton filed a final proxy statement with the SEC and is furnishing the final proxy statement to Hilton’s stockholders. Stockholders are urged to read the final proxy statement (and all amendments and supplements to it) and other materials that Hilton may file with the SEC when they become available in their entirety, because they contain important information about the proposed transaction. The final proxy statement has been mailed to Hilton’s stockholders. Stockholders can obtain free copies of the final proxy statement, as well as Hilton’s other filings, without charge, at the SEC’s website (www.sec.gov). Copies of the filings may also be obtained without charge from Hilton by directing a request to: Hilton Hotels Corporation, 9336 Civic Center Drive, Beverly Hills, CA, 90210, Attention: Atish Shah, Investor Relations (Tel: 1 310 205 8664, Email: atish_shah@hilton.com).