Apollo Global Management and Citigroup are offering an attractive private financing package worth approximately $3.5bn to support the sale of Boeing Co’s navigation unit, Jeppesen, according to a report by Bloomberg citing unnamed sources familiar with the matter.
The financing, structured as a so-called staple financing, offers a highly competitive rate of around 4.5 percentage points over the US benchmark, along with borrower-friendly terms, sources indicate. Bidders for Jeppesen are expected to submit their offers by Wednesday.
While prospective buyers are not obligated to opt into the Apollo-Citigroup financing, its inclusion could provide an advantage in structuring a competitive bid. Other private credit lenders, including Blue Owl Capital and Ares Management, are also reportedly preparing alternative financing options, the sources said.
The private credit sector has experienced significant pricing pressure in recent months, driven by a slowdown in acquisition-backed financings and increased competition from traditional banks. Wall Street lenders have been regaining market share, leveraging their ability to offer more cost-effective financing solutions.
In addition to private credit providers, major banks are also considering financing packages for the Jeppesen deal. Sources suggest that discussions include structuring a first-lien loan with pricing between 3 and 3.5 percentage points over the benchmark rate, while second-lien debt could be priced at around 5 percentage points.
Representatives for Apollo, Citigroup, and Blue Owl reportedly declined to comment, while Ares had not provided a response at the time of Bloomberg’s publication. Boeing stated that it “does not comment on market rumours or speculation.”
This debt proposal marks the first staple financing generated under Apollo’s private credit collaboration with Citigroup. The bank, which is advising Boeing on the Jeppesen sale, has positioned the financing as an appealing option for potential buyers, particularly as Boeing seeks to divest non-core assets to reduce its debt burden. The Jeppesen unit is expected to fetch at least $7bn.
Notably, the Citigroup-Apollo financing offers covenant-lite terms, providing additional flexibility to buyers.
