Hindalco’s Novelis Said to Lower Rate on $1.77 Billion Term Loan

Novelis Inc., the U.S. aluminum unit of India’s Hindalco Industries Ltd., lowered the rate it will pay on $1.77 billion of term loans, according to a person with knowledge of the transaction.

The interest on the debt, due in 2017, will be reduced to 2.75 percentage points more than the London interbank offered rate and the loan will be sold at par, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 75 basis point to 100 basis point floor. A basis point is 0.01 percentage point.

The interest rate will drop to 2.5 percentage points more than Libor when leverage is at 3.5 times, according to the person.

Lenders are being offered one-year soft-call protection of 101 cents, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first year, the person said.

Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Deutsche Bank AG, Credit Suisse Group AG and Royal Bank of Scotland are arranging the transaction and commitments are due by Feb. 27 at noon in New York, the person said.