8-KMaterial AgreementsFinancial EventsOther Events+1

Apollo Global Management, Inc. 8-K Report, Material Agreement (Aug 23, 2023)

Filed August 23, 2023For Securities:APOAPOSAPO-PA

Summary

Apollo Global Management, Inc. (APO) has filed an 8-K report detailing the successful issuance of $600 million in 7.625% Fixed-Rate Resettable Junior Subordinated Notes due 2053. This offering, which closed on August 23, 2023, was conducted under a shelf registration statement and is intended to raise capital to redeem outstanding Series A and Series B Preferred Stock of its subsidiary, Apollo Asset Management Inc. (AAM), along with associated fees. The new notes carry a fixed interest rate of 7.625% until December 15, 2028, after which the rate will reset quarterly to the Five-Year U.S. Treasury Rate plus a spread of 3.226%. Interest payments are scheduled quarterly, commencing December 15, 2023, with the company retaining the right to defer payments. This move signifies a strategic financial operation to manage outstanding preferred equity and potentially optimize the company's capital structure.

Key Highlights

  • 1Apollo Global Management, Inc. issued $600 million in 7.625% Fixed-Rate Resettable Junior Subordinated Notes due 2053.
  • 2The Notes closed on August 23, 2023, under a shelf registration statement.
  • 3Proceeds will be used to redeem $575 million (aggregate liquidation value) of Series A and Series B Preferred Stock of Apollo Asset Management, Inc. (AAM).
  • 4The Notes carry a fixed rate of 7.625% until December 15, 2028 (First Call Date).
  • 5Post-2028, the interest rate resets quarterly to the Five-Year U.S. Treasury Rate plus a spread of 3.226%.
  • 6Interest payments are quarterly, starting December 15, 2023, with an option for interest deferral.
  • 7This issuance is part of a capital management strategy to refinance preferred equity.

Frequently Asked Questions

The primary purpose of issuing these $600 million in notes is to raise capital to redeem the outstanding Series A and Series B Preferred Stock of Apollo Asset Management, Inc. (AAM). This is a strategic move to manage the company's capital structure and refinance existing preferred equity.

The notes are 7.625% Fixed-Rate Resettable Junior Subordinated Notes due 2053. They bear a fixed interest rate of 7.625% until December 15, 2028. After this date, the interest rate becomes variable, resetting quarterly to the Five-Year U.S. Treasury Rate plus a spread of 3.226%. Interest is payable quarterly, starting December 15, 2023, and the company has the right to defer payments.

This issuance effectively refinances $575 million of preferred stock with new junior subordinated debt. It replaces a more expensive or less flexible form of capital (preferred stock) with a different type of debt, impacting the company's leverage and capital structure. The reset feature of the notes provides flexibility in managing interest costs over the long term.

The Series A and Series B Preferred Stock of Apollo Asset Management, Inc. will be redeemed on September 22, 2023. The proceeds from the new note issuance, along with cash on hand, will be used to fund this redemption.