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Arconic downsizes to $700 million, launches seven-year secured notes at 8%; pricing Thursday
By Paul A. Harris
Portland, Ore., July 26 – Arsenal AIC Parent LLC launched the downsized secured bond portion of financing backing the buyout of Arconic Corp., market sources said on Wednesday.
The revised deal features $700 million (from $900 million) of seven-year senior secured notes (Ba3/B+/BB+) that launched at 8%, inside of the 8¼% to 8½% yield talk, and well inside of the 8¾% to 9% early guidance.
Pricing is set for Thursday.
The Rule 144A and Regulation S for life notes have their first call after three years at par plus 50% of the coupon.
The bond portion of the financing also includes a tranche of senior unsecured notes, which is downsized to $500 million from $725 million.
The unsecured notes are all being taken down by sponsor Apollo Global Management. Initial guidance on the unsecured notes had them pricing 300 basis points to 350 bps behind the secured notes. There were no updates on that pricing on Wednesday, sources said.
Wells Fargo Securities LLC is the left bookrunner for the secured notes. J.P. Morgan Securities LLC, Apollo Global Securities LLC, BMO Capital Markets Corp., Mizuho Securities USA Inc., TD Securities (USA) LLC, Citigroup Global Markets Inc.; Citizens Capital Markets Inc., Fifth Third Securities Inc., Standard Chartered Bank and Truist Securities Inc. are the joint bookrunners.
With the shift of proceeds from both tranches of bonds to the bank portion of the financing, the concurrent term loan B upsized to $1.425 billion from $1 billion.
Proceeds from the secured and unsecured notes, the term loan plus $2.3 billion of common equity will be used to fund the acquisition of Arconic, a Pittsburgh-based provider of aluminum architectural products, by Apollo 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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