Fortescue pulls $2.5 billion term loan, revises term debt extension

By Sara Rosenberg

New York, March 16 – Fortescue Resources eliminated plans for a new $2.5 billion seven-year term loan and instead is looking to raise $2.5 billion of senior secured notes due 2022 to refinance its 2017, 2018 and 2019 unsecured notes, according to market sources.

The term loan had been talked at Libor plus 425 basis points to 450 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

Also, the company is now looking to extend its $4,888,000,000 senior secured term loan to December 2021 from June 30, 2019, as opposed to extending the debt to 2022, sources said.

The extended term loan is talked at Libor plus 450 bps with a 1% Libor floor, compared to talk of Libor plus 425 bps to 450 bps with a 1% Libor floor at launch. The current spread on the term loan is Libor plus 275 bps.

Included in the extended term loan is 101 soft call protection for one year.

Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC are leading the deal.

Lenders are being offered a 5 bps consent fee and a 20 bps extension fee, sources added.

Consents are due at 3 p.m. ET on Tuesday.

Fortescue is an East Perth, Australia, iron ore producer.

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