A group of banks led by Citigroup Inc. and Bank of America Corp. is preparing to offload some of the debt that helped fund Apollo Global Management Inc.’s buyout of auto-parts maker Tenneco Inc. after holding it on their books for months, according to people with knowledge of the matter.
(Bloomberg) — A group of banks led by Citigroup Inc. and Bank of America Corp. is preparing to offload some of the debt that helped fund Apollo Global Management Inc.’s buyout of auto-parts maker Tenneco Inc. after holding it on their books for months, according to people with knowledge of the matter.
The banks are setting up meetings with potential investors this week and plan to formally launch a debt offering next week, said the people, who asked not to be identified because discussions are private. The size of the debt sale is yet to be determined, and the plans may change, the people added.
The new deal also tightens debt terms known as covenants to limit carve outs of business divisions as part of its asset sale provision, one of the people said.
Representatives for Bank of America, Citi and Apollo declined to comment.
Banks were forced to use their own balance sheets to fund about $5.4 billion of debt to help finance the buyout in November last year, after struggling to sell some of the financing to investors. A $1.4 billion leveraged loan and a $1 billion junk bond offered at steep discounts — just a portion of the overall debt package — were ultimately shelved, adding to the tens of billions of dollars of hung debt already stuck on Wall Street books at the time.
Leveraged finance markets have since thawed, creating an opportunity for banks to try to offload some of the debt. Average loan prices have recovered to around 95 cents on the dollar, and borrowers of all kinds have seen strong demand on recent deals that’s allowed them to increase the size of offerings and also slash borrowing costs.
–With assistance from Jill R. Shah, Carmen Arroyo and Allison McNeely.
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