Novelis Inc., with its subsidiary Novelis Corporation, is all set to tap into the debt market with USD 750 million senior unsecured notes. To be matured in 2033, these privately placed notes will be made available to the qualified institutional buyers under Rule 144A. International buyers are also eligible for the same under Regulation S, as guaranteed by Novelis and select subsidiaries.
With this issuance, Novelis, the leading aluminium rolling and recycling company, plans to allocate the net proceeds acquired from 750 million senior unsecured notes towards strategic economic decisions
- Repurchasing existing debts: A majority of the proceeds will be used to repurchase the outstanding 3.250 per cent senior notes, which are likely to mature in November 2026. This is likely to be a contingent effort on the valid tender and non-withdrawal of notes under the company’s previously announced tender offer. This transaction is intended for the proactive management of the company’s debt maturity profile and to reduce near-term refinancing risk.
- Covering transaction costs: Another portion of the fund will be directly allocated for the fees and expenses pertaining to the issuance of new notes and the concurrent tender offer. This includes underwriting fees, legal costs, and other administrative expenses related to the transactions.
- Redeeming remaining 2026 Notes: If any portion remains after the two primary expenses mentioned above, Novelis Inc. is most likely to leverage that to redeem any untendered 2026 notes at the applicable optional redemption price, plus accrued and unpaid interest. This is quite the right move at this stage to support the company’s objective of optimising its capital structure and interest expense profile.
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