Arconic $1.63 billion two-part notes expected July 24 week; Apollo to take down unsecured tranche

By Paul A. Harris

Portland, Ore., July 20 – A $1.625 billion junk bond deal backing the buyout of Arconic Corp. will launch into the market during the July 24 week, sources say.

The offering is expected to include $900 million of senior secured notes with 8¾% to 9½% initial guidance.

There is reverse inquiry at play in the secured notes, sources say, adding that early orders amount to the full size of the tranche.

The deal is also expected to include $725 million of senior unsecured notes with early guidance that has them coming 300 basis points to 350 bps behind the secured notes.

Sponsor Apollo Global Management is expected to take down the entire unsecured tranche, according to market sources.

J.P. Morgan Securities LLC will lead the notes sale, which is expected to price during the Aug. 1 week.

Proceeds, plus proceeds from a concurrent $1 billion term B, pari passu with the secured notes, and $2.3 billion common equity will be used to fund the acquisition of Arconic, a Pittsburgh-based provider of aluminum architectural products, by Apollo Global Management and Irenic.

The acquisition, which has an enterprise value of approximately $5.2 billion, is expected to close during the second half of this year.

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