Apollo Global Management Inc. is among a group that snapped up €500 million ($538 million) of steeply discounted loans that backed the acquisition of British grocery chain Wm Morrison Supermarkets Plc.
(Bloomberg) — Apollo Global Management Inc. is among a group that snapped up €500 million ($538 million) of steeply discounted loans that backed the acquisition of British grocery chain Wm Morrison Supermarkets Plc.
BNP Paribas SA led the sale process, which saw a number of banks offload the debt at 85 cents on the euro to Apollo, other hedge funds and collateralized loan obligation managers, according to several people familiar with the matter, who asked not to be identified because the matter is private. That’s an even bigger discount than in July — when a prior sale of the euro tranche sold at 87.25 cents.
Apollo and BNP declined to comment.
The €500 million sale marks the latest disposal of a euro term loan which was part of a bigger buyout package for Morrisons. Banks committed to loans and bonds worth £6.6 billion ($8 billion) in 2021 to back Clayton, Dubilier & Rice’s acquisition of the UK company.
The debt — along with billions of dollars in buyout financing from other deals — has been weighing on banks’ balance sheets since markets turned sour early last year, clogging up one of Wall Street’s most lucrative money-making machines.
So-called hung debt related to the Morrisons deal was reduced over the summer when Pacific Investment Management Co. bought the lion’s share of €800 million euros of loans offloaded by banks at 87.25 cents on the euro. Banks that didn’t sell at that point decided to wait for a higher price, but that hasn’t materialized in the latest sale, the people said.
After the sale to Apollo and others, banks will be left holding about £1.3 billion of the original debt package in term loans, which they are expected to continue to try and offload. The deal also included a £1 billion revolving credit facility.
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