Constellium, a producer of aluminum products for the aerospace industry, increased the interest rate it will pay on a $250 million term loan B to refinance debt, according to a person with knowledge of the transaction.
The financing was reduced to $250 million from $350 million as result of the company dropping its plan to fund a $70 million dividend to Apollo Global Management LLC (APO:US) and adding less cash to its balance sheet, said the person, who declined to be identified because the terms are private.
The six-year debt will now pay interest at 7.25 percentage points more than the London interbank offered rate, compared with a range of 6.25 percentage points to 6.5 percentage points, according to the person. The minimum on the benchmark will remain unchanged at 1.25 percent.
Constellium is proposing to sell the loan at 97 cents on the dollar, compared with 98 cents originally offered, the person said, reducing proceeds for the company and boosting the yield to investors.
Lenders are being offered call protection of 103 cents during the first year, according to data compiled by Bloomberg. The premium to refinance the debt will drop to 102 cents more than face value in the second year and 101 cents the following year.
Deutsche Bank AG is arranging the financing for the Paris- based company, the data show. Constellium was formed in 2011 after Apollo Global Management LLC, Fond Strategique D’Investissement and Rio Tinto Plc (RIO) acquired Alcan Engineered Products and renamed the company, according to the company’s website.
Melissa Mandel Kvitko, a spokeswoman for Apollo, declined to comment. Nicolas Brun, a spokesman for Constellium, didn’t immediately respond to an e-mail seeking comment.
So-called B loans are mainly bought by non-bank lenders such as collateralized loan obligations, mutual funds and hedge funds.
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