Apollo-Backed Novolex to Launch $3B Term Loan, $1.6B Bridge Loan for $6.7B Acquisition of Pactiv Evergreen 

Apollo-backed food packaging manufacturer Novolex will launch a $4.6 billion debt financing package in the coming months to back its $6.7 billion acquisition of Pactiv Evergreen, according to sources.

Novolex’s debt financing consists of a $3 billion term loan and a $1.6 billion bridge loan, which is expected to convert into high-yield bonds, according to sources. Wells Fargo is lead left on the deal, according to sources. UBS, Barclays, RBC Capital Markets and Morgan Stanley are among other banks on the deal, according to a press release.

Investors looking at the deal said that they are interested in the credit as it will be the first M&A transaction of the year for the packaging sector.

One investor noted that they like Pactiv’s business and predict that the two packaging companies combined will have strong synergies. The investor also noted that their only concerns about the deal are macro factors, such as destocking, which means companies are reducing inventories and not replenishing them, which reduces demand for packaging. However, they expect the packaging sector to be generally fairly strong this year. The most recent packaging sector insights report by Octus, formerly Reorg, can be found HERE.

A second investor said they are interested to see how Novolex’s deal plays out, given that the company and packaging businesses as a whole have struggled in recent years, especially with challenges regarding destocking. The investor added, however, that the consensus among market participants feels very constructive on packaging, and it sounds like this deal may be a recovery story.

Pro forma adjusted leverage on the combined Novolex and Pactiv Evergreen company is about 5x, according to sources.

Pactiv Evergreen’s $990 million term loan B was last quoted today at 100/100.38, according to Solve. Its 4% 2027 bond was last quoted on Feb. 24 at a price of 100.23 to yield 3.628% while its 4.375% 2028 bond was last quoted on Feb. 26 at 100.5 to yield 4.05%, according to Market Axess. A list of Pactiv Evergreen’s existing CLO lenders can be found in Octus’ CLO Database HERE. A list of Novolex’s existing CLO lenders can be found HERE.

Novolex’s 8.75% 2030 bond was last quoted today at a price of 101.71 to yield 7.85% while its 6.62% 2029 bond was last quoted today at a price of 101.05 to yield 6.08%, according to Market Axess. Meanwhile, its 6.87% 2030 bond was last quoted yesterday, Feb. 26, at a price of 102.01 to yield 6.2%.

Novolex announced in December 2024 it had entered into a definitive agreement to acquire Pactiv Evergreen for $18 per share in an all-cash transaction valued at $6.7 billion, inclusive of Pactiv Evergreen’s net debt as of Sept. 30. It is also supported by Apollo and CPP Investments, which will contribute $1 billion and will become a significant minority shareholder in the post-merger company, according to the release. The transaction is expected to close in the second quarter of 2025, according to a release.

Barclays Bank PLC is acting as lead financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Novolex. Morgan Stanley & Co. LLC and RBC Capital Markets LLC are also acting as financial advisors to Novolex. Goldman Sachs & Co. LLC and Lazard Frères & Co. LLC are acting as financial advisors and Paul Hastings LLP is acting as legal advisor to Pactiv Evergreen.

Apollo completed its acquisition of a majority stake in Novolex from Carlyle in 2022, according to a press release. Financial terms were not disclosed.

Moody’s Investors Service and S&P Global Ratings hold B1/BB- ratings on Pactiv Evergreen while Moody’s holds a B3 rating on Novolex. Following the announcement of Novolex’s acquisition, S&P placed Pactiv Evergreen on CreditWatch negative, noting that the ratings agency will “likely lower the issuer credit rating on Pactiv Evergreen by one or more notches when the proposed transaction closes,” reflecting its view of financial-sponsor owned companies and “expectations for a more-aggressive financial policy following the transaction.”

Wells Fargo declined to comment. Novolex, Pactiv Evergreen and Apollo did not respond to requests for comment.