Rinehart Bidders Said to Submit Offers for A$7 Billion FinancingPaulina Duran and Elisabeth Behrmann
Australia’s four largest banks are expected to bid to join the A$7 billion ($6.5 billion) financing of Gina Rinehart’s Roy Hill mine development by today’s deadline, four people familiar with the matter said.
Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp. are among lenders expected to submit bids today, the people said, asking not to be identified because the details are private. Some of them are expected to commit at least A$400 million to be eligible for future business related to the iron ore project, three of the people said. The debt is expected to have an average maturity of between 10 and 11 years, with a seven-year repayment period after the project has been built, those people said.
Roy Hill doesn’t respond to “unauthorised and/or incorrect speculation from unnamed sources,” Darryl Hockey, a Perth-based spokesman for Roy Hill, said in an e-mailed response to questions today. “The debt financing is progressing well and feedback remains positive,” he said.
Rinehart, Asia’s richest woman, is negotiating with banks encouraged by a 24 percent rally in iron ore prices from this year’s May low fueled by renewed Chinese demand, even as analysts surveyed by Bloomberg forecast a 29 percent slide in the steel-making mineral over the next four years.
Between 16 and 20 banks are expected to submit offers to participate in the project, three of the people familiar with the matter said. After the bids are formally received today, the company is expected to take a number of weeks to harmonize a set of terms and conditions for the lenders, according to three of the people.
Stephen Ries, a spokesman for ANZ, Bryan Fitzgerald, a spokesman for CBA, Fiona Macrae, a spokeswoman for NAB and Emma Rumble, a spokeswoman for Westpac, all declined to comment.
Roy Hill is seeking part of the financing from export credit agencies, including Japan Bank for International Cooperation, Export-Import Bank of Korea, Nippon Export & Investment Insurance, Export-Import Bank of the United States and Korea Trade Insurance Corp., the company said last December. The board of U.S. Ex-Im yesterday gave preliminary approval for $694 million in financing for the project, according to an e-mailed statement from the lender.
The split between bank debt and export credit finance is yet to be finalized, three of the people familiar with the matter said. Roy Hill is seeking about A$4 billion from the agencies and around A$3 billion from banks, a separate person familiar with the matter said in August.