🧠 Food for thought

Implications, context, and why it matters.

This debt refinancing echoes Apollo’s positioning as a structured-finance provider

• Apollo’s acquisition of Yahoo closed in September 2021, with Verizon retaining a 10% stake in the company 1.
• Large financings like this sit at the center of Apollo Global Management’s strategy, which depends on packaging complex private credit and hybrid deals (financing that blends different types of debt and equity) 2.
• Apollo earlier issued a US$1.8 billion, five-year loan at an 11.5% interest rate to support New Media Investment Group’s acquisition of Gannett (a large U.S. newspaper publisher), announced in August 2019 and completed in November 2019 3.
• More recently, Apollo arranged about US$1.23 billion in long-term capital for Russell Investments (an investment-management firm) through Apollo-managed funds, and it committed US$1.0 billion for a 49% interest in a joint venture with Realty Income (a real estate investment trust) 2.

The refinancing could constrain flexibility if debt service crowds out investment

• The refinancing follows a pattern where high-interest borrowing can weigh on a portfolio company’s operations and limit spending on future plans.
• In the Apollo-backed Gannett transaction, critics said heavy debt payments pulled revenue away from digital transformation work 3.
• The combined business also faced pressure to deliver US$275 million to US$300 million in projected annual cost-saving synergies (savings from combining operations) within two years, and some observers warned the targets could lead to thousands of layoffs 3.
• Those dynamics can clash with Apollo’s stated aim at the time of the Yahoo acquisition to “invest in growth across the business” and “enhanc[e] the daily user experience” at Yahoo 1.