Barminco Plans Up to $500 Million High-Yield Bond Sale in U.S.

Barminco Holdings Ltd., the Australian mining services provider backed by Gresham Private Equity Ltd., is planning a $500 million sale of high-yield bonds to investors in the U.S. by mid-year, according to a person familiar with the matter.

The Perth-based company has sent requests for proposals on the offering to financial institutions including three U.S.- based investment banks, the person said, asking not to be identified because the details are private. Barminco’s debt package is expected to also include some Australian dollar- denominated revolving loans, and lenders are due to present their proposals to Barminco this week, the person said.

Australian companies are borrowing a record amount from high-yield investors in the U.S. as an exodus of European lenders and heightened banking regulations damp liquidity in Asia’s bank debt market. Syndicated loans in the region outside Japan slumped 18 percent last year to $377 billion, according to data compiled by Bloomberg.

An external spokesman for Barminco couldn’t immediately be reached for comment on the company’s financing plans today.

Barminco was granted an extension until November on its senior debt due last month, the person said. The company owes A$341 million ($352 million) to its lending syndicate, Jock Muir, chairman and acting chief executive officer, told local press in December.

Delayed IPO

Barminco, which is unrated, is also planning an initial public offering of shares in 2014, the person said. It deferred an IPO in 2011 because of unfavorable market conditions.

As part of the debt maturity extension negotiations, one of the original lenders, Aozora Bank Ltd., was replaced by Goldman Sachs Group Inc., which acquired A$17 million of the debt at a discount from the Japanese lender, the person said.

Goldman Sachs and U.S.-based fund Värde Partners LP also lent A$50 million via a so-called payment in kind note which matures in November, the person said.

The company’s nine other senior lenders are National Australia Bank Ltd., Westpac Banking Corp., BOS International, GE Capital, Allied Irish Banks Plc, KBC Groep NV, Caterpillar Finance Corp., Rabobank International and Mega International Commercial Bank Corp., the person said.

Payment in kind loans are a form of high risk financing which typically don’t provide for any cashflows from the borrower to the lender between the facility’s drawdown and the maturity date.

To contact the reporter on this story: Paulina Duran in Sydney at pduran10@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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