The investors that plan to buy 99-Cent Only Stores announced on Monday a $250 million notes offering to help finance the $1.6 billion acquisition.

Private equity firm Ares Management LLC and the Canada Pension Plan Investment Board said they also would contribute about $536 million in common equity toward the deal, which is expected to close in the first quarter of next year.

The Los Angeles global asset manager and the Toronto, Ontario-based pension plan reached a deal with the Commerce discount chain’s board in October to take the company private. 99-Cent Only operates 291 stores in California, Arizona, Nevada and Texas.

The senior unsecured notes, due in 2018, would be offered to institutional investors in a private placement. Other terms were not disclosed.

Moody’s Investors Service assigned a new corporate family rating of “B” to 99-Cent Only, which is in the “junk” non-investment grade range. Moody’s also assigned a “Caa1” rating to the notes, and a “B2” on its proposed $525 million senior secured term loan. The rating agency’s rating outlook is “Stable.”

Shares closed up 3 cents, or less than 1 percent, to $21.86 on the New York Stock Exchange.