Apollo talks $1 billion three-year convertible preferreds to yield 6.5% to 7%, up 17.5% to 22.5%

By Abigail W. Adams

Portland, Me., Aug. 7 – Apollo Global Management Inc. plans to price an offering for $1 billion of three-year $50-par series A mandatory convertible preferred stock (Baa1/BBB/BBB) after the market close on Tuesday with price talk for a dividend of 6.5% to 7% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

Goldman Sachs & Co. LLC (lead left), Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are bookrunners for the SEC registered offering, which carries a 30-day greenshoe of $150 million.

Apollo Global Securities, LLC is also a joint bookrunning manager.

Paul, Weiss, Rifkind, Wharton & Garrison LLP and Walkers (Cayman) LLP, Cayman Islands are advising the issuer. Simpson Thacher & Bartlett LLP is advising the bookrunners.

The notes have takeover and dividend protection above 43 cents a quarter.

Proceeds will be used to accelerate growth of the company’s retirement services segment.

Depending on market conditions, after pricing the offering of the mandatory convertible preferred stock, Apollo may conduct a subordinated debt financing transaction to redeem the Apollo Asset Management, Inc. outstanding preferred stock. The mandatory convertible preferred stock will be junior to any such additional debt securities with respect to dividend rights and distribution rights upon liquidation, winding-up and dissolution.

Apollo is a New York-based private equity firm.

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