Novelis Preps $2.5 Billion 2-Part 7-Year/10-Year Bond Offer

NEW YORK -（Dow Jones）- Aluminum company Novelis Inc. is in the high-yield bond market with a $2.5 billion two-part offering expected to price Friday, according to a person familiar with the deal.

Joint bookrunners for the offering will be Citigroup Inc. （C）, Bank of America Merrill Lynch, Royal Bank of Scotland Group PLC （RBS, RBS.LN） and UBS AG （UBS, UBSN.VX）.

The senior unsecured notes will be offered in two parts, consisting of a seven-year tranche that is noncallable for three years and a 10-year tranche noncallable for five years, according to the person familiar with the deal. Tranche sizes have not yet been determined.

The notes are expected to carry ratings of B2 from Moody's Investors Service and B from Standard & Poor's, and will carry standard high-yield covenants.

Novelis is also entering into new senior secured credit facilities consisting of a $1.5 billion six-year term loan facility and an $800 million five-year multicurrency asset-backed revolving credit line and letter-of-credit facility.

Proceeds from the transactions will go toward refinancing existing bond and bank debt, and to finance a $1.7 billion dividend to Novelis's parent company, according to the person familiar with the deal.

Last week, Novelis announced that it had increased the total consideration for its previously announced tender offer for its 7.25% senior notes due 2015 to $1, 032.50 for each $1,000 principal amount tendered by Dec. 8, 2010. It has also commenced a tender offer for its 11.5% senior notes due 2015.

-By Michael Aneiro, Dow Jones Newswires;