By Paul A. Harris
Portland, Ore., April 22 – FMG Resources, a subsidiary of Australia-based Fortescue Metals Group Ltd., priced an upsized $2.3 billion issue of 9¾% senior secured notes due March 1, 2022 (Ba1/BB+/BBB-) at 97.608 to yield 10¼% on Wednesday, according to a market source.
The deal, which was upsized from $1.5 billion, priced on top of final coupon, price and yield talk.
The discount decreased from the 96.5 area, where initial discussions took place, according to market sources. The yield came inside of initial discussions which contemplated a yield as high as 10½%.
J.P. Morgan Securities LLC ran the books.
The East Perth, Western Australia-based iron ore mining company plans to use the proceeds to redeem its 6% senior notes due 2017 and its 6 7/8% senior notes due 2018. The company will use the additional proceeds that resulted from the upsizing of the deal to address its 2019 maturities.
As part of the transaction, about $450 million of notes due 2019 have been swapped into the new secured notes, according to the source.
| Issuer: | FMG Resources (Fortescue Metals Group Ltd.)
|
| Face amount: | $2.3 billion, increased from $1.5 billion
|
| Proceeds: | $2.24 billion
|
| Maturity: | March 1, 2022
|
| Securities: | Senior secured notes
|
| Bookrunner: | J.P. Morgan Securities LLC
|
| Coupon: | 9¾%
|
| Price: | 97.608
|
| Yield: | 10¼%
|
| Spread: | 851 bps
|
| Call protection: | Three years
|
| Trade date: | April 22
|
| Settlement date: | April 27
|
| Ratings: | Moody's: Ba1
|
| Standard & Poor's: BB+
|
| Fitch: BBB-
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 9¾ at 97.608 to yield 10¼%
|
| Marketing: | Quick to market
|
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