Fortescue talks $2.5 billion seven-year secured notes to yield 8%-8¼%; pricing Tuesday

By Paul A. Harris

Portland, Ore., March 16 – Australian iron ore producer Fortescue talked its $2.5 billion offering of seven-year senior secured notes to yield 8% to 8¼% on Monday afternoon, according to an informed source.

Books close at 1 p.m. ET on Tuesday, and pricing is set to take place thereafter.

The Rule 144A and Regulation S for life notes offering was announced Monday morning after Fortescue withdrew its $2.5 billion seven-year term loan from the market.

The bond deal was subsequently shopped on a Monday investor conference call.

Joint physical bookrunner Credit Suisse Securities (USA) LLC will bill and deliver. J.P. Morgan Securities LLC is also a joint physical bookrunner.

The notes become callable after three years at par plus 50% of coupon and feature a three-year 40% equity clawback and 101% poison put.

The issuing entity is FMG Resources Pty Ltd., a direct, wholly owned subsidiary of Fortescue Metals Group Ltd.

The Perth, Australia-based company plans to use the proceeds to fund tender offers for all of its 2017 and 2018 senior notes and a portion of the 2019 senior notes and for general corporate purposes.

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