Tenneco whispers $1 billion secured notes due 2028 with 8% coupon and OID to yield 12%

By Abigail W. Adams

Portland, Me., Nov. 1 – Pegasus Merger Co., an affiliate of Apollo Global Management, Inc., whispered its $1 billion offering of six-year non-call three-year senior secured notes backing the buyout of Tenneco Inc. with a coupon of 8% and an original issue discount for an all-in yield of 12%, according to market sources.

There will be an investor conference call on Thursday with the roadshow scheduled to run through Nov. 10.

Pricing is expected thereafter.

BofA Securities Inc. is leading the Rule 144A and Regulation S offering.

Citigroup Global Markets Inc., Barclays, BNP Paribas Securities Corp., Jefferies LLC, RBC Capital Markets LLC, TD Securities (USA) LLC, Wells Fargo Securities LLC, Deutsche Bank Securities Inc., BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, ING Financial Markets LLC, Mizuho Securities USA Inc., MUFG, Santander Investment Securities Inc. and U.S. Bancorp Investments Inc. are also bookrunners.

The notes carry a 101 poison put.

There is a 40% equity clawback during the no-call period.

Proceeds, together with borrowings from a new term loan, senior bridge facilities, an equity contribution and cash, will be used to fund Apollo’s acquisition of Tenneco.

Tenneco is a Lake Forest, Ill.-based designer, manufacturer and marketer of automotive products for original equipment and aftermarket customers.

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