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Signature Group to issue shares, new debt to finance $525 million acquisition of Aleris unit
By Lisa Kerner
Charlotte, N.C., Oct. 21 – Signature Group Holdings, Inc. will use a combination of cash on hand, proceeds from equity offerings, preferred stock and debt to fund its $525 million acquisition of the global recycling and specification alloys business of privately held Aleris Corp., according to Signature chief financial officer Kyle Ross.
Signature will use $45 million of cash on hand to fund the deal, which will be paid for through $495 million in cash and $30 million of Signature preferred stock.
“Regarding the equity offerings, we expect to first conduct a primary offering for approximately 4 million shares and then follow that with a stapled rights offering,” Ross said during a conference call to discuss the transaction on Monday.
A portion of the rights offering will be backstopped by Zell Credit Opportunities Fund, LP, an affiliate of Equity Group Investments.
The company plans to issue about $300 million of senior secured bonds in a private placement.
Goldman Sachs will lead a committed bridge financing with Deutsche Bank, the release stated.
General Electric Capital Corp. will provide a $175 million asset-based lending facility to finance the growth of the company, according to a company news release. Of that amount, $70 million will be used to fund the acquisition, executives clarified during the call.
The transaction is slated to close prior to Jan. 31.
Signature is a Sherman Oaks, Calif.-based holding company that invests primarily in the U.S. industrial and commercial marketplace.
Aleris’ global recycling and specification alloys business is based in Cleveland.
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