Apollo, Citi Pitch Up to $4B Financing to Back Boeing’s Jeppesen Buyout as Multiple PE Bidders Vie in Second Round; Unitranche Pricing Could Hit SOFR+450 Bps

Reporting: Paola Aurisicchio, Maryna Irkliyenko, Michael Haley

Citi and Apollo Global Management, in their newly formed partnership, are offering a competitive $3 billion to $4 billion debt package to back the upcoming buyout of Boeing’s navigation unit Jeppesen, according to sources. The business could be valued at $7 billion, according to sources.

The sale process is in the second round with more than five bidders short-listed, including software-focused private equity firms Thoma Bravo and Vista Equity Partners, alongside strategic buyers. Final bids come due at the end of March, the sources said.

Citi and Apollo are offering several financing options as they vie against other private credit funds keen to finance the hotly contested Jeppesen auction. Citi is offering a $3 billion bank financing staple through a first and second lien structure, implying around 7x to 8x leverage, according to sources. Apollo is also offering a private loan at around 8x leverage, according to sources.

Potential lenders, including HPS and Blue Owl, among others, are also actively pursuing financing the buyout, according to sources. Given the competitive debt process and the deal’s sizable financing, the pricing on a unitranche could reach as low as SOFR+450 bps, said two sources.

In addition to unitranche financing, direct lenders are offering a PIK tranche as well as a preferred equity component.

While the EBITDA may vary due to the carve-out nature of the asset, some are structuring the deal off $350 million EBITDA.

The staple financing, should it be used by the winning bidder, would be the first deal for the recently announced Apollo-Citi partnership. The duo teamed up six months ago for a $25 billion private credit and direct lending program following several similar partnerships between banks and private lenders in an effort to expand in the fast-growing private credit market.

The potential sale of Jeppesen is expected to drive fierce competition because of the lack of M&A volume and the opportunity for direct lenders to deploy money. The transaction follows a $5.3 billion acquisition of healthcare software company Modernizing Medicine by private equity firm Clearlake Capital. Ares led at least $2 billion in debt financing with pricing in discussion ranging from 450 to 500 bps, Octus, formerly Reorg, reported.

Jeppesen provides electronic flight information services, including navigation data, computerized flight planning, aviation software products, aviation weather services, maintenance information, and pilot training systems and supplies. Boeing acquired Jeppesen in 2000 from Tribune Co., according to an announcement. The company was valued at $1.5 billion at the time.

On Jan. 28, Boeing released its results for the fourth quarter of 2024. Its fourth-quarter revenue dropped 31% year over year to $15.24 billion, with an operating loss of $3.77 billion, according to the release.

The decline was primarily due to the International Association of Machinists and Aerospace Workers, or IAM, work stoppage, charges for certain defense programs, and workforce reduction costs, Boeing said.

Fewer commercial deliveries and poor working capital timing also struck Boeing’s operating cash flow, which stood at roughly negative $3.5 billion in the fourth quarter of 2024, while free cash flow dropped to negative $4.1 billion.

In October, Boeing sold 90 million shares of common stock, each valued at $5, and $5 billion worth of depositary shares in order to instill cash, according to a press release.

Boeing’s consolidated debt dropped to $53.9 billion from $57.7 billion after it repaid a $2.5 billion bond due this year. The plane manufacturer also has access to $10 billion in undrawn credit facilities. Its liquidity position was strengthened with cash and marketable securities totaling $26.3 billion at the end of the same quarter.

On Jan. 29, Fitch Ratings affirmed Boeing’s long-term issuer default rating, or IDR, at BBB- and short-term IDR at F3, both under a review – no action status.

Boeing’s 2.75% 2026 notes were last trading today, Friday, March 14, at 98.13 to yield 4.95%, while its 5.15% 2030 notes were last trading at 99.56 to yield 5.24%, according to MarketAxess.

Boeing Co., which trades on New York Stock Exchange under the ticker BA, was last indicated at $160.92 per share today.

Boeing’s capital structure is shown below:

Citi, Vista Equity Partners, Thoma Bravo and HPS declined to comment. Apollo, Blue Owl and Boeing did not respond to requests for comment.