An agreement to write off $180 million will benefit the central bank more, the hotel chain's owner says
POSTED: 1:30 a.m. HST, Oct 19, 2010
Unite Here Local 5 leaders have said throughout their five-day strike at the Hilton Hawaiian Village that Blackstone Group LP, the private-equity firm that owns Hilton Worldwide Inc., got $180 million in taxpayer money as part of the government's cleanup of troubled bank assets.
Local 5 says that Blackstone should sign a new contract that provides job security to all Hilton union workers since Blackstone took money from the Federal Reserve Bank of New York that was intended to prevent job losses.
Blackstone says it is true the Federal Reserve agreed to write off $180 million of the money it was owed early this year, but Blackstone adds that the Fed will end up making a profit on the deal. The Fed continues to be an investor in Hilton and, as a result of the hotel's recent recovery, should recoup the money it wrote off, Blackstone says.
"The Federal Reserve struck a very hard bargain and ultimately will make a profit from its position," said Blackstone spokesman Peter Rose, who was in Shanghai yesterday.
Blackstone had to inject an additional $800 million into Hilton earlier this year to get concessions on restructuring some of the hotel chain's debt, Rose said.
"Blackstone took $180 million in taxpayer money, lined their pockets and is now asking workers, their employees, to give even more," Local 5 spokesman Cade Watanabe said. "Everyone should be outraged. That money was supposed to be used to stimulate the economy and to protect jobs, not hurt workers."
Blackstone is the world's largest buyout firm and has a market capitalization of nearly $15 billion. In addition to owning Hilton, it has a stake in Hawaii through the $500 million it has agreed to invest in the Chapter 11 bankruptcy plan of General Growth Properties Inc., owner of Ala Moana Center and Ward Centers. General Growth, which owns both malls, is expected to emerge from bankruptcy next month.