Fortescue launches consent bid for notes due 2022, 2023, 2024, 2027

By Sarah Lizee

Olympia, Wash., Feb. 4 – Fortescue Metals Group Ltd. wholly owned subsidiary FMG Resources (August 2006) Pty. Ltd. launched a consent solicitation to amend four series of its notes, according to a press release.

The $750 million of 4¾% senior notes due 2022 (Cusips: Q3919KAJ0, 30251GAU1), $500 million of 5 1/8% senior notes due 2023 (Cusips: Q3919KAL5, 30251GAY3), $750 million of 5 1/8% senior notes due 2024 (Cusips: Q3919KAK7, 30251GAW7) and $600 million of 4½% senior notes due 2027 (Cusips: Q3919KAM3, 30251GBA4) are included in the consent bid.

The issuer is seeking to amend the notes to allow Fortescue to carve out subsidiaries that are financed with non-recourse project finance debt from the existing ‘significant subsidiaries” definition in the notes’ indentures.

As a result, the amendments will allow Fortescue to finance projects that may arise from time to time with limited recourse project finance debt, without creating cross-acceleration or cross-default exposure to the notes, and amend the definition of “project debt” to reflect the structure of project finance debt that may be incurred to finance that project debt.

The proposed amendments are intended to align the project debt-related terms of the notes with Fortescue's other debt instruments, including the term loan and revolving credit facility.

The issuer is offering a consent payment of $2.50 per $1,000 principal amount of notes.

If the requisite consents are not received for all series of the notes, the proposed amendments will not become effective for any series of notes, except that the issuer reserves the right to waive the cross-condition, in which case the proposed amendments may become effective only for those series of notes for which the requisite consents are received.

The consent solicitation will expire at 5 p.m. ET on Feb. 12.

The solicitation agent is J.P. Morgan Securities LLC (866 834-4666 toll-free or 212 834-2042 collect) and the information and tabulation agent is D.F. King & Co., Inc. (212 269-5550 for banks and brokers, 800 714-3306 toll-free or fmg@dfking.com).

Fortescue Metals is a Perth, Australia-based iron ore company.

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