Bloomberg News

Apollo Said to Plan $5.5 Billion of Debt to Buy El Paso Unit

February 27, 2012

(Updates with lead underwriters in fifth paragraph.)

Feb. 24 (Bloomberg) -- Apollo Global Management LLC, the private-equity firm leading a group that’s near a deal to purchase El Paso Corp.’s oil-exploration business, is planning $5.5 billion of debt financing to fund the acquisition, according to three people with knowledge of the transaction.

The financing is expected to include $3.5 billion of bonds and a $2 billion reserve-based loan, about $1 billion of which will be funded at closing, said the people, who declined to be identified because no agreement has been signed.

Citigroup Inc., JPMorgan Chase & Co., UBS AG, Credit Suisse Group AG, Deutsche Bank AG, Bank of Montreal, Royal Bank of Canada and Nomura Holdings Inc. are expected to underwrite the debt, the people said.

An agreement with Apollo, which is working with Riverstone Holdings LLC and at least one other partner to purchase the El Paso unit for about $7 billion, may be announced as soon as today, according to a person with knowledge of the situation. The negotiations are fluid and could still fall apart, said the person, who declined to be named because the talks are private.

Citigroup is expected to lead the bonds backing the deal and JPMorgan may lead the reserve-based loan, three people said. Those roles could still change as an agreement hasn’t yet been signed, one of the people said. A borrower’s ability to draw funds from a reserve-based loan is based on a percentage of the value of its oil and gas reserves.

Charles Zehren, an outside spokesman for Apollo, declined to comment. Richard Wheatley, a spokesman for El Paso, didn’t immediately return a phone call seeking comment.

--With assistance from Cristina Alesci in New York. Editors: Chapin Wright, Faris Khan

To contact the reporter on this story: Christine Idzelis in New York at

To contact the editor responsible for this story: Faris Khan at

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