Fortescue Said to Seek $4.95 Billion Covenant-Light Term Loan

Fortescue Metals Group Ltd (FMG), Australia’s third-biggest iron ore exporter, is seeking a $4.95 billion term loan to refinance debt, according to a person with knowledge of the transaction.

Credit Suisse Group AG, the bank arranging the covenant-light financing, meaning it will not contain maintenance requirements, said the person, who asked not to be identified because the deal is private. The bank will hold a lender call tomorrow at 10 a.m. in New York to discuss the terms.

Proceeds of the debt will refinance borrowings outstanding under a $5 billion credit the company obtained last year. The debt was quoted at 100.69 cents on the dollar today, according to prices compiled by Bloomberg.

Fortescue is proposing to pay interest at 3.75 percentage points more than the London interbank offered rate, down from 4.25 percentage points more than the lending benchmark paid on the existing loan, the person said. Libor will have a 1 percent minimum.

The five-year debt will be offered to lenders at 99.75 cents on the dollar, the person said. Investors have until Nov. 6 to submit commitments.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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