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FMG pulls $1 billion term loan from market due to recent weakness
By Sara Rosenberg
New York, May 26 - FMG Resources Pty Ltd. withdrew its $1 billion six-year senior unsecured term loan from the market as a result of "weakness in credit market conditions," the company said in a news release.
The company said it received significant investor interest in the loan, but the proposed offers did not result in terms and conditions that met its expectations.
The loan was launched this past Monday at talk of Libor plus 375 basis points to 400 bps with a 1% Libor floor and an original issue discount of 99.
It was non-callable for two years, then at 102 in year three and 101 in year four.
J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and RBS Securities Inc. were the joint bookrunners on the deal.
FMG Resources went on to disclose that it is proceeding with its $500 million three-year unsecured revolver.
Commitments toward the revolver have been received from banks, and documentation is expected to be completed by early June.
Ratings on the term loan and revolver had been B1 from Moody's Investors Service, B+ from Standard & Poor's and BB+ from Fitch Ratings prior to the withdrawal of the term loan.
Proceeds from the credit facility were going to be used to help fund the $8.4 billion expansion to 155 million tonnes per year and for liquidity and for general corporate purposes.
The company said that it continues to hold significant cash on hand and operating performance continues to generate substantial cash flow, and, as a result, the decision not to proceed with the term loan does not impact the expansion to 155 million tonnes per year.
FMG Resources is an Australian-based iron ore mining company.
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